June 22, 2016
As the FinTech ecosystem is rapidly expanding, fresh initiatives require funding. So far, there hasn’t been a lack of options for startups to turn to and in the near future, it is doubtful that the source will dry up. Even concerns over the business models of FinTech startups triggered at a new level by Lending Club situation didn’t stop new venture funds from launch. Let’s look at some of the freshest venture funds aimed to support the startup ecosystem and foster innovation in the financial services industry.
On Tuesday, German international financial marketplace operator Deutsche Börse announced the launch of a dedicated corporate venture capital (CVC) platform – DB1 Ventures, which will focus on fostering strategic investments in FinTech firms.
As stated in the official press release, DB1 Ventures will invest only in areas that are strategic to Deutsche Börse. The focus will primarily be on early- to growth-stage FinTech firms in order to establish mutually beneficial partnerships.
DB1 Ventures will initially be funded via the significant resource base of Deutsche Börse’s balance sheet. The strategic investments will be governed by a dedicated Investment Committee, which will be chaired by Deutsche Börse CEO Carsten Kengeter and have a cross-functional and business perspective.
Our objective with DB1 Ventures is to continue to be active in investing in early- to growth-stage ventures which are core or adjacent to our client, product, geographic and technology strategy. And as part of our active management, we will also deepen and extend promising partnerships with some of our current portfolio companies, said Carsten Kengeter, CEO of Deutsche Börse.
Recently, the State Bank of India was launched InCube, a specialized branch to understand and address banking needs for setting up a startup. The branch will provide suitable solutions in banking transactions and investments on a robust technology platform for particular business models.
As SBI Chairman Arundhati Bhattacharya said at the CII Banking Tech summit, This fund shall consider assistance of up to Rs. 3 crore to an Indian registered company for promoting their business innovations using IT in India for banking and related technology.
In addition to financial support, the bank has also gathered a mentoring team to assist startups. It will support, monitor and make a report on the progress and the utilization of the funds by the venture, as reported by The Indian Express.
The mentoring team will play a supportive and guiding role to assist businesses in various areas, including possible additional funding requirement. Moreover, it will provide external legal and financial assistance upon requirement.
Singapore’s VC firm Life.SREDA launched the Banking on Blockchain fund, a new €100-million FinTech fund specifically targeting innovations in blockchain technology in Europe and Asia.
To launch the BB Fund, Life.SREDA has partnered with financial expert and FinTech specialist Chris Skinner. The VC firm itself made an initial capital investment of $5 million into the fund, but is reported to have a goal to expand its capital base to $50 million by the end of 2016 and aims to top $100 million in backing from financial institutions by 2017. The BB fund will be headquartered in London and main investment focus will be on the European market.
Chris Skinner’s blog says that the BB Fund will be offering capital for early-stage blockchain companies that have use cases relevant to banks:
The objective of the fund is to nurture those companies we believe have the best possible chance of success based upon detailed due diligence of the technical, managerial and business capabilities. This will ensure that banks who invest in the BB Fund not only get early sight of the key developments in this new technology, but also a broad range of investments to ensure that they have at least invested in the ones that should succeed rather than just one that might succeed.
At the end of May, international law firm Simmons & Simmons announced the launch of the first fund of its kind designed to help early-stage FinTech businesses solve the legal problems they encounter.
According to the official press release, the firm has set aside £100,000 a year for the Simmons & Simmons FinTech fund to provide legal advice up to the value of £33,000, free of charge, to three or four businesses each year.
As Angus McLean, Partner and leader of the firm’s International FinTech Team, commented: Early-stage FinTech businesses in the UK currently face challenges finding the right kind of legal support. Our vision is for the S&S FinTech Fund to help promising startups solve challenging legal or regulatory problems that could otherwise slow down their development or, in some cases, prevent them from getting off the ground at all.
To qualify for support via the fund, FinTech startups will have to meet eligibility criteria including a requirement that they have received no more than £1 million of investment, and that they have been accepted onto one of the leading UK FinTech accelerator programmes or have been referred to Simmons & Simmons by a leading FinTech-focused VC investor.
At the end of last month, another fund was established by the Minister for Jobs, Enterprise and Innovation, Mary Mitchell O’Connor TD. A new €500,000 Enterprise Ireland Competitive Start Fund (CSF) was established to stimulate startup activity in the FinTech sector. The fund, which is a part of the IFS2020 strategy, is reported to provide up to €50,000 in equity support by Enterprise Ireland for each successful applicant.
The CSF is open to early-stage companies providing technology-driven solutions in Payments, Banking, RegTech, Security, and InsurTech and FinTech solutions that leverage Blockchain, IoT, AI and Data Intelligence.
As Leo McAdams, Divisional Manager ICT & International Services at Enterprise Ireland commented in the official press release, A priority for Enterprise Ireland is to help Irish entrepreneurs and companies to start up. A key objective of the IFS2020 Strategy is to create more jobs. By introducing a specific startup fund targeting the FinTech sector, Enterprise Ireland is leveraging our strong International Financial Services reputation and our world-class startup ecosystem to allow ambitious entrepreneurs to start, scale and succeed – providing valuable jobs here into the future.
China recently witnessed the launch of the first angel fund and accelerator focusing on FinTech, as the official press release states. Backed by the Fugel Holding, FinPlus is aimed to push the development of financial technology in China.
As Mosso Lau, Head of FinPlus, commented in the official release, "FinPlus is building a FinTech incubating and accelerating system, which will provide support for FinTech projects with full services including angel investment, operating fund supporting, operation model counseling, business resources, human resources, and guidance in user resources. Moreover, FinPlus's activities are not limited to China. We invest worldwide. FinPlus is now in discussion with Imperial College London on potential collaboration."
In light of how Lau perceived the opportunity, he gave the investment plan a name with a definite cosmic feel: The Wormhole Programme. The programme will have a duration of six months, at each stage of which FinPlus will introduce innovative FinTech startups around the world to the Chinese market and identify local entrepreneurship projects in China, creating a space where FinPlus can provide angel investment and follow-up financing services for startups while opening up opportunities for industry leaders and top executives of companies in the field to engage in in-depth discussions about the startups.
The Wormhole Programme will also provide post-investment services such as free co-working offices, 1 to 5 million RMB in angel investment funding for each startup, resources of 1 million quality clients who are users and businesses with connections to financing organizations across the industry, assistance in forming resource alliances (areas include product design, Internet big data processing, user experience design and analysis, market analysis, marketing promotion, legal and accounting as well as human resources), featured reporting by Chinese and international media, opportunities to receive ongoing investment, forward-thinking FinTech MBA classes and the latest industry news, among other resources.