Deutsche Bourse is to set up a dedicated fintech venture fund, DB1, to invest in early to growth stage companies operating in the capital markets arena.
The DB1 Ventures team will be primarily based in Frankfurt and will undertake new investments as well as actively manage Deutsche Bourse’s existing minority shareholdings, some of which will be offloaded in an attempt to build a more balanced strategic portfolio.
Ankur Kamalia, managing director Deutsche Bourse, head of venture portfolio management and responsible for DB1 Ventures, says: “This dual approach will allow us to bring in our professional expertise as a market infrastructure provider and offer value creation opportunities for fintech companies. In return, we will benefit from new ideas and technological developments in an early stage. Simultaneously, we continue to actively manage our existing portfolio of investments, including divestments where necessary.”
The bourse gives no indication of the value of the fintech war chest, merely saying that investments will be funded off its balance sheet.
An investment committee, with a 'cross functional and business perspective' will be chaired by Deutsche Bourse CEO Carsten Kengeter.
“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," he says. "And as part of our active management, we will also deepen and extend promising partnerships with some of our current portfolio companies."
The Exchange has been slowly fine-tuning its approach to the fintech phenomenon in recent months, investing in Illuminate’s IFM Fintech Opportunities Fund, and taking a strategic stake in blockchain startup Digital Asset Holdings. It has also established a fintech hub in Frankfurt to support the Hessian State Government’s initiative to create a startup ecosystem.
The creation of the fund coincides with the publication of a report produced by Celent on behalf of Deutsche Bourse that highlights the power of future collaboration between leading financial infrastructure players and fintech firms.
Fintech has proved to be one of the key drivers of transformation of the banking industry, through pioneering business models, proximity to the end customer, and innovative technology," states the papaer. "Now fintech firms, in conjunction with incumbent infrastructure players, are imagining a new capital market modeled on a collaborative approach to capital provision, technology, regulation, work-flow processes and connectivity."
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