During the panel session “Billions for FinTech” at the European FinTech Awards & Conference Michael Treskow, principal at Accel Partners, illustrated the skyrocketing investments in FinTech. Between 2013 and 2014 the funding into FinTech tripled on a year-on-year basis. “A lot of the jump comes from follow-on investments and non-VC investors”, Treskow adds. The vast majority of FinTech investments is related to payments and lending, particularly the latter.
Moderator Ruben Munsterman (editor-in-chief of the Dutch M&A Magazine) asks the panel, which besides Treskow includes Vladislav Solodkiy (CEO Life.SREDA) and Stefan Kestil (partner SpeedInvest), how the raised funds are generally allocated. “Regulatory expenses, marketing and sales. Just growth capital in general”, Treskow indicates. Munsterman informs whether most FinTech companies are already profitable.
Treskow says that he focuses on profitability on individual client level as “quick growth comes with a lot of marketing costs”. According to Solodkiy, profitability is an issue for FinTech companies. “Investments in attention are important. How quick can you attract attention? Just a few FinTech companies are able to create a substantial customer base.” Klestil concludes that there is no lack of capital for FinTech. He sees that most investments flow in the direction of young consumer brands. “Those need a lot of investments, while B2B-companies need less”, Klestil says.
As the investment flow thickens promising FinTech companies have room to be more picky in their selection of investors. The panel members agree that those companies are not merely looking for money. “They are looking for a collaboration of ideas and knowledge”, Solodkiy says. “A founder wants more value for investments. They want to be challenged”, Klestil adds.
Often FinTech companies are regarded as competitors or even replacers of banks. “They can offer a lot of services cheaper than existing banks”, Solodkiy believes. However, the panel members believe that FinTech companies are not necessarily the competitors of banks. “We do not only compete, but also partner. We have complementary values”, Treskow says.
Has one of the panel members already discovered the next Uber? And how do you discover the new Uber as investor? According to Treskow, there is no checklist to find the new Uber. “You are looking for ambitious entrepreneurs with the right skill set”, Treskow feels. Kestil agrees that the entrepreneur is more important than the idea. “As good entrepreneurs recognize the opportunities in the market.” Although the panel members see a lot of talented entrepreneurs, they do not dare to state they have are currently investing in the next Uber.