Since its rise in 2008, FinTech has been disrupting the banking industry, reshaping the payment infrasructure, and transforming the way consumers manage and use money. Investment in FinTech skyrocketed from $928 million in 2008 to $3 billion in 2013;
The fourth quarter of 2014 was the busiest in FinTech history, with $1.27 billion of venture capital invested in 82 deals. In fact, the increase in FinTech investment has outpaced total overall VC investments by a factor of four.
We at Madison Alley have taken a close look at which investors have been particularly successful in making FinTech bets. Yesterday, at the AlwaysOn OnFinance Conference in New York City, we announced The Mad Alley 8: Top Global Investors in FinTech.
Here are the winners.
The Mad Alley 8: Top Global Investors in FinTech
1. Top Public Exit: Norwest Venture Partners: Norwest Venture Partners, alone with Canaan Partners, invested in online lending marketplace Lending Club seven years ago. In Series A, they paid 27 cents a share and they made 55 times their money. As of IPO last December, Norwest was the top shareholder with a stake worth $762 million.
2. Top Early Stage Investor: RRE Ventures: With New York being the center of fintech investments, we unsurprisingly selected New York-based RRE Ventures as a top early stage investor. RRE made close to twenty investments into fintech. One of its most notable bet is OnDeck, the loan financing platform for small and medium sized businesses.
3. Top Growth Stage Investor: Bessemer Venture Partners: Another New York based firm Bessemer Venture Partners has decades of experience investing in the financial services industry. In the seventies, Bessemer invested in bank services roll-ups. In the nineties, Bessemer has been an active investor in banks. And, in the last ten years, the firm has become increasingly active in areas as diverse as capital-markets technology, wealth management, specialty finance, proprietary trading and research. Together with Anthemis Group, Bessemer invested into a personal money management platform Betterment that raised $105 million in four rounds with Bessemer participating in all of them.
4. Top Late Stage Investor: Warburg Pincus: Warburg Pincus is a huge global private equity firm focused on growth investing, with more than $37 billion in assets under management. The firm’s active portfolio of more than 120 companies is highly diversified by stage, sector and geography. We selected Warburg Pincus for two reasons. It is a sponsor of the FinTech Innovation Lab, which is attracting innovative emerging companies to NYC, and for its investment in Yodlee, a financial platform for the banking industry. In 2002, after the stock market collapsed and the company slashed its valuation, Warburg Pincus put in $20 million, bought out some early investors, and became Yodlee’s largest equity holder. Yodlee is now a public company.
5. Top Corporate Investor: HSBC: Forward thinking big banks have begun setting up their own venture capital funds. London-based, HSBC allocated $200 million for investments into Fintech. While Spanish BBVA, UK’s Barclay’s, Swiss UBS and others have allocated funds for investments into Fintech. Just recently Circle, a digital currency platform, has announced a new round of $50 million. Notably Goldman Sachs participated in this round.
6. Top European Investor: Index Ventures: One of Europe’s leading VC firms Index Ventures has raised over half a billion dollars for a new fund to invest in fintech, marketplaces, and gaming. Index Ventures has been an early investor into P2P lending platform Funding Circle, which has raised in total an astonishing $273million, and in Transferwise, a P2P money transfer service.
7. Top Asian Investor: Trust Bridge Partners: More than 150 Chinese fintech startups received funding last year. 2015 started with bang: Chinese online Peer-to-peer lending startup RenRenDai raised $130 million. The Series A round was lead by Shanghai-based Trust Bridge Partners, surpassing Lending Club’s $125 million round, which was led by Google.
8. Top Financial Technology Specialist: Anthemis Group: London-based Anthemis Group is an early stage venture investor that is focused exclusively on Fintech. The firm has built a diversified portfolio of high growth digitally native financial services companies based across the globe. Some of its notable investments include a personal money management platform Betterment and Moven, an app, debit card and personal money coach that gives customers feedback in real-time on every spending decision.
With so many qualified investors pouring virtually unrestrained cash into this red hot sector, 2015 is expected to be another banner year for fintech, with a total amount of venture investments projected to double.
Congratulations to the winners!