If you want to assess how important the fintech industry is, follow the money. Huge investments by banks and a growing pile of cash being poured into fintech startups. And if you want to follow the money, follow the guys with the money. One notable group who is investing a lot into Fintech is Venture Capital firms. So let’s have a look at the top Venture Capitalists investing in Fintech.
VCs invest at various stages of the development of a company. From seed and early stages to growth stage. They provide the necessary capital for Fintech startups to grow. Some activities within financial services, such as business lending, are particularly capital intensive.
Who are the top Venture Capitalists investing in Fintech?
Globally, a few firms are particularly active in the space, unsurprisingly large American venture capitalists.
Notably household names like 500 Startups, Ribbit Capital or Andreessen Horowitz. They have invested in all the most successful Fintech startups of the past few years: digital payments Stripe, consumer and business finance app Revolut, or consumer bank Nubank.
Europe also has a number of very active VCs in the Fintech space such as NFT Ventures from Sweden, Speedinvest from Austria, or Seedcamp from the UK. Alongside these household names from both sides of the Atlantic, you have a number of smaller funds that are investing in the many of fintech startups that are flourishing.
Where are the VCs investing?
When Fintech first emerged on the back of the Great Financial Crisis of 2008/2009 and the years that followed, venture capitalists were mostly interested in the obvious use cases, the low-hanging fruits.
Payments and foreign exchange were quite evident broken customer journeys. We therefore saw startups emerging that are now behemoths like Stripe or TransferWise.
After that, you had a wave that still continues of retail-focused apps like Monzo or Revolut. Easy business case, targeting the masses in big cities with incumbent-killer apps. And finally, Fintechs started to look at more complex small and medium business-focused use cases, with the likes of OakNorth. There are obviously many more categories and sub-categories within Fintech, from financial infrastructure to peer-to-peer lending, blockchain or even crowdfunding.
What to expect in the years to come?
Venture Capital money is the lifeblood of many Fintech startups. Be it from VC funds or Corporates through their venture arms, like Santander Innoventures (now known as Mouro Capital). But that’s the problem, there are too many companies operating without a proper business model. Not even talking about profitability but rather a clear path to monetisation.
It is paramount to grow your customer base, but many fintech businesses actually have no idea how to take it from there. This is especially true in retail banking where many apps are going after the same customers. They all offer slick customer experience and a friendly user interface.
Problem is, that does not pay the bills. And with the economic crisis due to the Covid-19 outbreak, many of these businesses will fail. The lucky few that have just raised funds or have a sustainable business model will prevail. And the fintech industry will likely emerge even stronger with a few dominant players.