By acquiring a further 26% stake in TTMzero, Danish-British United Fintech has reached the 51% tipping point to gain majority ownership of the Berlin-based RegTech, one of five acquisitions made during United Fintech's just two-and-a-half-year lifespan.
The initial investment was made in 2021 and just two years later under United Fintech’s umbrella, revenue has grown 2.5X in the German software provider whose primary clients today includenames like Citi, Morgan Stanley and Commerzbank. And according to Simon Ullrich, co-founder of TTMzero together with Soenke Blunck, the growth journey is a testimony of a partnership where the whole is more than the sum of its parts, which prompted the two founders to sell when the right offer came along:
"Our main motivation was that we wanted access to global markets and with United Fintech’s network, we believe we can grow into new jurisdictions. On their platform, we’re in good company with other innovative founders and experience a lot of important synergies between their technology products and ours. As founders, we preserve the core culture of TTMzero which has always been a focus on product innovation and UX while United Fintech provides a scalable platform that allows us to service our customers as a global company. Thus it’s a ‘best of both worlds’ scenario and in the current market, where it's a matter of size for those who want to be part of the bid for the banks' digital transformation, it makes great sense to be part of something bigger to realize our full potential", says Simon Ullrich, who explains the growing demand for large scale software relationships in fintech, with increased compliance and security requirements driving institutional customers towards larger vendors rather than smaller independent software companies.
Joining a bigger journey
Simultaneously and in a separate transaction, the two German entrepreneurs have used part of their share sale proceeds to invest in United Fintech on a group level. According to United Fintech CEO Christian Frahm, the fintech platform’s projected growth in the coming years poses a rare opportunity for fintech founders wanting to join a bigger journey. He perceives the fintech platform’s position and stewardship as an enabler in a multitude of directions, as today’s financial institutions are steering towards larger technology vendors:
“For the past few years, the trend has been that financial institutions are looking to reduce the number of third-party suppliers. Historically, this would mean more expansive contracts with legacy providers, however, this is where we differentiate ´with a rare combination of great technology from the best niche providers under one umbrella, and we now see this emerging as a winning combo. On a group level, our revenue has increased 5-fold, both organically and via M&A, and predicting only further growth in the niche over the next few years, it was obvious for us to gain a majority stake in TTMzero", says Christian Frahm, who retains intricate knowledge of the fintech and financial industries from his days with Finalto which he founded in 2008.
Partnering with banks for their digital journey
In little over two-and-a-half years, United Fintech has grown from being just Christian Frahm to employing more than 160 people in 8 countries through both organic growth and by acquiring 5 capital markets software companies, converting these into United Fintech's digital platform partners, in course of action adding i.a. Barclays, Deutsche Bank, ABN Amro, BNP Paribas and Standard Chartered Bank to their list of over 200 customers globally. Over the next 10 years, Christian Frahm's ambition is to complete multiple strategic acquisitions and partnerships with Capital Markets fintechs; to build an "end-to-end roadmap" for banks, asset managers and other financial services firms to replace their old legacy infrastructure with innovative fintech:
"The financial sector is realizing that getting off legacy infrastructure and embracing newer and more open architecture is critical for survival in a world where their customers' behavior and needs are changing drastically. The best products come from niche product companies - not from large legacy providers. That's why our value proposition is attracting massive interest from financial services firms around the world, all of whom are in a digital race against time, and why these seem to rally around larger core providers over smaller stand-alone software firms like never before, giving United Fintech and our platform of products a seriously competitive advantage", concludes Christian Frahm.