Blog article
See all stories »

1 Bn worth of new FinTech-focused funds just in 2013

It has never been a better time to start (or own!) a FinTech Startup- or so it seems.

VC funds, bank and tech provider venture funds pumped in over a billion dollars in FinTech-focused funds in 2013 alone.

The announcements and the size of the funds underscore the attention FinTech is getting from investors and the confidence of expected returns.

The variety of players (i.e. Banks, Tech Providers, VCs) launching these funds is proof that no other sector offers the permutations and combinations of start / fund / build / buy / partner / acquire options, and the players involved, for example:

- B2B startup (e.g. data analytics) selling to banks, funded by VC

- B2B startup  goes B2C (e.g. use big data for credit decisions, then use it to offer micro-credit), competes with bank/FSI, funded by VC

- B2C startup (bank competitor, e.g. lending), goes B2C, but also offers white-labeled platform (B2B); acquired by tech provider

- B2C startup (bank competitor, e.g. mobile trading), acquired by bank, which offers it as white-labeled platform sold to other banks on a SaaS model

We see quite a few of these models in play already in a comparatively smaller but promising FinTech scene here in Germany / D-A-CH

Not too far we can also see bigger startups acquiring smaller or geographic rivals to accelerate growth, or merging with partner(s) in different but complementary parts of the banking value chain- while compliance, cost pressures and scandals keep the big banks busy.   

Here is the 2013 FinTech Fund "calendar" so far (with the disclaimer: these are based on publicly available information and we are not responsible for the completeness or correctness of the information in this post or on the links below):

Jan. 2013 BBVA sets up $100 million fintech venture fund

Jan. 2013 Ribbit Capital Closes $100M Venture Capital Fund; Launches Inaugural Fund with Four Initial Investments

May 2013 Bloomberg LP Gets In Venture Game With $75M Fund

Sep. 2013 New € 100 million VC FinTech Fund to be launched in Barcelona

Sep. 2013 Morgenthaler partners form new $175M fund to invest in cloud, fintech, & health IT

Sep. 2013 Former VeriFone chief Bergeron and GTCR create $500 million fintech acquisition fund

The murmurs could be heard in 2012 already.

Feb. 2012 Hapoalim sets up NIS 80m (~$21M)  financial tech fund

Aug. 2012 Life.SREDA with a $10m Mobile and FinTech fund

Oct. 2012 Sberbank sets up $100 mn FinTech Startup Fund

For a peep into FinTech venture funds before they were even called FinTech:

Apr. 2011 Intuit Supports Entrepreneurs by Committing $37 Million

Nov. 2011 American Express Dedicates $100 Million To Venture Fund

Mar. 2010 Citi Ventures and its focus areas

1969 RBC Venture Partners and its portfolio as per Crunchbase

 

7553

Comments: (4)

A Finextra member
A Finextra member 12 October, 2013, 23:02Be the first to give this comment the thumbs up 0 likes

Payments per se is not a Blue Ocean field... Moreover, the cost of making (any) payment can only go down... Both merchants and consumers are expecting payments to be (almost) free. Hence, there is little money to be made in pure payments. 

True potential of "fintech" is in the TECH part of it. Take the cornerstone of payments, for example - authentication. App-based solutions do not work well, for an obvious reason. Transit is another good example.

 

Samarth Shekhar
Samarth Shekhar - SixThirty Ventures - Amsterdam 14 October, 2013, 10:15Be the first to give this comment the thumbs up 0 likes Hi Alex, thanks for your comment. I do not agree with "true potential of FinTech is in the TECH part of it". Banks wasted enough money on tech for the sake of tech, increased their IT costs, charged customers more for poorer service etc. FinTech winners are working backwards from what customers *really* want or would like, and use just the right bit of technology magic to deliver that.
A Finextra member
A Finextra member 14 October, 2013, 10:40Be the first to give this comment the thumbs up 0 likes

Sorry, I was not clear: I meant "tech" as in h/w - as opposed to s/w. There is only so much you can do with a re-hashed code. For true innovation, you need an innovative way to access/control the physical infrastructure.

Samarth Shekhar
Samarth Shekhar - SixThirty Ventures - Amsterdam 14 October, 2013, 13:12Be the first to give this comment the thumbs up 0 likes Agreed, in that specific context.