January 26, 2016
NFT Ventures and Finnish media company MTV have announced their collaboration on a new FinTech fund in Finland that aims at promoting activities of technology startups in the banking sector. The fund is looking to fuel the FinTech ecosystem in Finland. MTV, as a media partner, will ensure nation-wide media visibility for technology startups. However, in return, FinTech startups will have to offer up shares in equity. The fund is looking to make around 10-12 investments during the upcoming 18 months.
The established fund will be investing in FinTech startups, which are at the leading edge of the transformation process in banking. FinTech startups looking to get attention from the fund, will be expected to complement and create innovative solutions for the banking industry.
Johan Lundberg, the CEO of NFT Ventures, shared in the press release, We see that banking will undergo the same transformation process as many other industries, such as Mobile communication, Media and Airlines, have done. With the fund we want to be at the forefront of that transformation and help technology start-ups to accelerate it.
By establishing the fund, NFT Ventures and MTV are looking to lead the banking transformation process in Europe. Previously, NFT Ventures had been actively involved in Swedish FinTech ecosystem development. The goal, now, is to apply a similar strategy in Finland, in collaboration with MTV.
As MTV’s CEO Jarkko Nordlund commented, MTV wants to do its share in supporting the Finnish economy and to boost growth of FinTech companies in the banking sector. This cooperation benefits everyone, from the entrepreneur that is provided with a wide array of marketing tools to the fund and its investors. We have high hopes for this collaboration as a similar way of operating has already been tested with great success in the form of our Media 4 Equity Fund, that we launched in July 2015.
The FinTech ecosystem in the country is expected to grow in the coming years. As an example, digital payments in Finland are expected to reach $11 billion in 2016. Worth also mentioning is the Finnish FinTech startup MONI, which raising $1.5 million in December last year to help EU refugees.
However, even with the promising landscape, law firm Castrén & Snellman warns investors to take into consideration the strict regulatory environment. As stated by its attorneys, with more FinTech startups entering the Finnish market, their biggest challenges may be related to understanding and navigating complex regulation. Even simple FinTech services, such as providing mobile payment solutions or trading applications, may require licenses to provide payment or investment services.
Another important point to consider is that the use of personal data is strictly regulated in the EU under the Data Protection Directive. Further, data protection regulation is expected to come into effect during the upcoming years in the form of the new European Data Protection Regulation. At the same time as regulation is increasing, new technologies are looking for broader opportunities to utilize personal data with permission.
With great opportunities, there are also complexities for the existing investors/funds to consider. Some of them are related to the possibility of increased compliance and risk management costs as well as liability risks when conducting due diligence. In the environment of tightening regulations, this may become especially challenging.