A report published by Accenture in March shows that global investment in fintech ventures has more than tripled during the last 5 years, from below $930 million in 2008 to more than $2.97 billion in 2013. Banks too are getting involved in this space – both Santander and HSBC have launched $100 million and $200 million funds respectively.
Russian fintech venture capital firm Life.Sreda is looking to raise $100 million for a fund that will invest in the peer-to-peer lending space in the UK and US. The fund will look to invest in the equity of early-stage platforms – in search of the next Lending Club or Prosper.
Founding partner Vladislav Solodkiy said that the firm has already secured $20 million and is now in fundraising talks with banks, telcos and retailers, many of which are based in Asia. The fund will concentrate in investing in European and US fintech startups, in areas such as crowdfunding, mobile-first banks, online micro lending and peer-to-peer lending. Solodkiy that the blend of such businesses represents one of the “most fast-growing areas”.
Interestingly, about 10% of the fund will be allocated to ventures in Russia. One of the biggest risks for this Russian fund is that further economic sanctions could be placed on Russia as a result of its actions in the Ukraine. This could limit their ability to invest abroad. But Solodkiy has indicated that he doesn’t think the sanctions will have an adverse effect on the fundraising or upon the fund’s investments. He suggests that the main reason for making only limited investments in Russia is that the banking system in Russia is very new and so people are not ready for disruptive firms just yet. The same cannot be said, according to Solodkiy, for the UK: “London has one of the most tired banking systems in the world”.
It is interesting to watch the flow of institutional money coming into the funding of platforms. For example GLI Finance has invested in an impressive portfolio of alternative finance providers, including Raiseworks, LiftForward, and Platform Black. This flow of money is an indication of the growth potential of the industry as institutional investors, both at home and abroad, want to get involved at this early stage.