Given the current circumstances, more and more startups are trying to redefine the rules in the world of finance. It is a sector that did not change much in the past 10 to 20 years but has now started to evolve dramatically. As a matter of fact, the global fintech market is predicted to grow at a rate of almost 23 per cent over the next couple of years.
In this regard, Amsterdam and London-based venture capital fund, Finch Capital has announced the first close of its €150M fund – Europe III, to support and fund the European fintech and AI companies shaping the future of finance.
Europe III will target Series A and B growth funding
With the new European fund, Finch Capital will invest between €2 to €10M in Series A and B stages and acquire minority stakes in scale-ups with €2 to €5M in revenues. This is to close the funding gap of this segment that is currently underserved by the European VC and Growth market. The firm plans to back 15-20 European startups, targeting liquidity 3-5 years post-investment, over the fund’s three-year initial investment lifespan.
Radboud Vlaar, MD Finch Capital says, “We have always been bullish on investing in Financial Technology. Moving forward, we are doubling down on Financial software, especially those companies that leverage AI to this end. We have seen the industry mature, giving rise now to a rich but fragmented landscape of robust businesses with €2 to €5M in revenues. These are the companies we are focused on working with now. With the right support and management, they have great risk/return outcomes and they are ready to build leading positions and consolidate the European market.”
According to the press release, Europe III has witnessed a near 90 per cent follow on investment from previous funds.
Finch’s both, Fund I (€40M) and Fund II (€110M) are generating top-quartile returns. To date, the firm has made a total of 40 investments across Europe and Asia, and its assets now total $400M (approx €330M). Its current portfolio includes companies including Trussle, Fourthline, Goodlord (which acquired Vouch), Grab, Hiber, BUX, Twisto, and Zopa; exits include Salviol and Cermati, with two exits in process.
The team supports its portfolio companies by providing deep networks and sector expertise across:
- Regional partnerships and M&A in Europe
- A large network of Corporates and Financial Institutions to which portfolio companies can sell products
- Hands-on experience in expanding internationally, especially in Asia
As active investors, Finch Capital seeks between 20 to 49 per cent ownership in its portfolio companies.
Steve Crossan joins as a venture partner
In 2020, Google and DeepMind alum Steve Crossan joined as a venture partner with an aim to build out the firm’s AI expertise.
He says, “Europe is ready to compete in the global enterprise tech arena, with more capital being deployed in AI/Deeptech than any other industry – $20B (approx €16.5B) last year alone. In the wake of general performance pressure, we see an acceleration of the finance sector in their tech understanding and adoption creating pressure for additional innovation in these areas.”
About Finch Capital
Founded in 2013 by Hans de Back and Radboud Vlaar, Finch Capital is an early-stage venture capital firm with a focus mainly on the FinTech sector in Europe and South East Asia.
“We leverage our international network and industry expertise to enable our portfolio companies to grow into leaders in their field,” mentions the company in a press release. The firm claims to have a track-record of backing future champion companies including Aylien, BUX, Brickblock, Brytlyt, Fixico, Fouthline, Goodlord, and Grab among others.
Finch Capital consists of a team of 12 investment professionals with wide entrepreneurial experience (e.g. Adyen, Deliveroo, Deepmind), prior investment experience (e.g. Accel, Atomico, Egeria), and industry backgrounds (e.g. Facebook, Google and McKinsey).
In 2020, the firm had launched a $50M (approx €41.2M) fund – Finch Capital SEA II, for investments in Southeast Asia. The fund will hold its first close in the coming months, having announced investment partnerships with Arise (Part of MDI) and a leading South-East Asian Bank.
In January 2020, Finch Capital launched Flowrence, its proprietary Machine Learning AI tool, to support its deal flow and high-quality deal sourcing. The tool tracks thousands of early investors and angel networks, media organisations, government agencies, and social media platforms in order to build a complete view of the latest trends in innovation within the fintech markets.
Over the last 6 months, 20 per cent of the firm’s shortlisted deals were sourced by Flowrence which was helpful for the firm during the Covid-19 lockdown.