Data from CB Insights shows that the fintech landscape is dominated by a small number of VC. To give you an idea of who the big players, the 11:FS Research team has rounded up the most active 11 funds (to keep things simple we’ve based it on activity between Q2 2016 and Q2 2017).
In terms of larger trends, anyone who’s raised funds will be unsurprised to see that this list is dominated by West-coast firms. But that’s not the whole truth; examples like SBI, SpeedInvest, and QED’s Latin American focus broaden the field.
1. 500 Startups
[caption id="attachment_64216" align="alignleft" width="300"]
Former 500 Startups General Partner, Dave McClure[/caption]
Since 2010, the fund has raised $500m, allowing them to invest in 1,700+ companies across 60+ countries. Although the fund is headquartered in California, localised investment funds in Asia, Europe and Latin America provide an international coverage. Famous in the fintech scene for their successful exit of Simple when it was acquired by BBVA for $117m, and other investments in CreditKarma, Flywire, FeeFighters. The fund’s fintech investments are led by Sheel Mohnot, a former founder with two successful exits under his belt who was previously at BCG and Microfinance NGO Kiva. The fund’s reputation has recently suffered a serious drop following high profile accusations from a number of female entrepreneurs of misconduct and harassment by founder Dave McClure.
2. New Enterprise Associates
Unlike the comparatively baby-faced 500 Startups, NEA has been around for more than 40 years. While some funds are led by managing partners with star-status, NEA prefers to stay below the radar. Instead, the fund’s results do all the talking. With investments in Braintree, Groupon, WebMD, Jet, and Salesforce, there’re plenty of impressive names. NEA’s interest in fintech is simple: ‘if the market’s big and the state of innovation is stagnant—we’re likely paying attention.’ It’s also the only firm to have raised $2bn+ funds since the dotcom crash. The firm’s fintech lead is Ravi Viswanathan, a former Goldman/McKinsey alumni.
3. Ribbit Capital
Another Californian fund, but one that’s entirely focused on investments in the financial space. Since launching in 2012, Ribbit has backed ‘entrepreneurs in ten different countries who are providing financial services to customers in nearly every major city on earth’. They’ve also got a hell of a catchy mantra: ‘it takes money to change money’. The fund’s investments include Credit Karma, Robinhood, Funding Circle, Wealthfront, Funding Circle, and Coinbase. Any subscribers to 11:FS Pulse can view videos and analysis on a number of these fintechs. Interestingly, Ribbit also invested in bitcoin directly and was said to control around 5% of the market in 2014 along with Social + Capital Partnership. In March, the firm announced a $300m fund. Founder Meyer “Micky” Malka describes the post-crash financial scheme as a ‘perfect storm’ of smartphone tech and consumers who were willing to try new things.
Our fun fact about Ribbit is that the name is taken from the noise a frog makes, referencing the way fintech startups leapfrog existing infrastructure and competition.
4. Index Ventures
This 20-year old VC fund’s repertoire includes Dropbox, Sonos, Slack, Squarespace, and Funding Circle. Co-founder Mike Volpi is famously bullish on bitcoin, and investments in Xapo and Bitpay reflect this. Rather than the usual Californian headquarters, Index splits itself equally between a London and San Francisco. The firm will be on the radar for lots of London fintechs given its role in Revolut’s massive $66m funding round this summer.
5. Union Square Ventures
[caption id="attachment_64217" align="alignleft" width="214"]
Fred Wilson, Union Square Ventures[/caption]
One of the most famous VC funds, USV bases its investment strategy on companies that leverage network effects; a simple but effective strategy, which led to investments in Twitter, Tumblr, and Etsy, and Soundcloud. Co-founder and blogger Fred Wilson is vocal about blockchain and sits on the Coinbase board. Other investments in this space include identity protocol provider OneName and decentralised marketplace OpenBazaar. Check out this clip of Fred Wilson mocking the ‘dumb money’ that is now rushing into the blockchain space.
6. SBI Investment
One of the leading Japanese VC funds, SBI has been involved in recent partnerships and investments with some very interesting players. The firm has connections with Blockchain payments protocol Ripple, the German banking platform Solaris, and digital currency exchange Kraken. The push into fintech is only likely to continue, with the recent announcement of a $200m fund and research lab.
7. Andreessen Horowitz
[caption id="attachment_64215" align="alignleft" width="300"]
Marc Andreessen - Cofounder and Partner, Andreessen Horowitz[/caption]
Founded in 2009, a16z (there are 16 characters between the first and last letter) is already arguably the most high profile investment fund on Sand Hill Road. Every year, about 3,000 startups approach co-founders Ben Horowitz and Marc Andreessen. Just a fraction of those will receive funding. High profile fintech investments include Instacart, Filecoin, and crypto-currency VC Polychain Capital.
One of the few major firms to have their primary base in Europe, SpeedInvest’s offices cover Vienna, London, Munich, and Silicon Valley. Unsurprisingly, one of the firm’s aims is to bridge European and US markets (though most of their investments are in early-stage European startups). Unlike some of their American contemporaries, SpeedInvest’s measured approach to fintech skips the bravado. And it’s paid off. SpeedInvest was one of just three investors in Holvi, which was snapped up in an acquisition by BBVA. Interested in what SpeedInvest saw in Holvi? Dive into some analysis of the fintech’s unique navigation UI via the 11:FS Pulse platform.
9. Thrive Capital
Thrive positions itself as the New York-based anchor against the flow of ideas, people, and capital towards the West Coast. Led by Joshua Kushner (brother of Trump’s son-in-law Jared), the firm has made investments in London-based challenger Monzo, Berlin’s savings product market place Raisin, and insurance fintech Lemonade.
10. QED Investors
Founder Nigel Morris’s experience at Capital One led him to believe that VCs should spend time bridging the gap between fintechs and banks: ‘The fintech is often much more adroit at pitching venture capital than at pitching banks, and they're very different story lines.’ While QED’s investments span the globe, over the past few years the firm has paid attention to Latin America with a particularly high profile investment in NuBank, Brazil’s leading challenger bank, and a partnership with Scotiabank to spearhead more fintech investment in the region. Other investments of note in the fintech space include Clearscore, Remitly, and Credit-Klarna.
11. Khosla Ventures
Menlo Park Fund Khosla Ventures has been around since 2004, and has invested a not-inconsiderable $10bn+ via a seed fund and a main fund. In the fintech space, investments in Stripe and Square and a heavy interest in blockchain technology have placed Khosla on the radar of many fintechs.
So, what does the future of VC funding look like? Honestly, it’s hard to tell. There’s some debate over whether VC-funding has peaked and if ICOs could replace it (and although we didn’t cover that here, if you’re interested head over to the State of the Union podcast for some thoughts on that).
What we do know is that successful VCs are ones that can look 2, 5, or 10 years plus into the future. Incremental change just won’t cut it. They’re looking for the next paradigm, whether that’s in the blockchain technology that powers Filecoin, the big-picture thinking that inspired Stripe’s efforts to be the payment provider of the future, or the core technologies that are powering challenger banks.
Whether you’re a rapidly growing fintech or an international financial institution, the 11:FS Pulse platform provides a look at cutting-edge fintech products from across the globe. Request a demo to check out many of the brands mentioned in this piece.
For more information about our research team and the research projects we can deliver, drop us a line.
To find out more about 11:FS Pulse, visit the website, or contact us for more details about how you can access this fantastic research and insights tool.