As global fintech investment might reach new heights this year, Russian players are in the game with several Moscow-based firms announcing plans to invest massively in this industry.
Thus two asset management companies, Fintech Capital and Da Vinci Capital, are launching a $200 million debt finance fund for fintech companies. FinTech Capital is owned by ID Finance, an internationally oriented high tech lender, and by Russian financier Yuri Popov. Da Vinci Capital is one of the most established investment firms operating in Russia and neighboring countries.
Debt finance for online lending
Dubbed ‘FinTech Credit Fund,’ the new investment vehicle will focus on companies involved in consumer and SME lending, including both balance sheet and marketplace (P2P) lenders. The fund will provide loans to the companies themselves and finance their loan portfolios. FinTech Credit Fund is also interested in analytical solutions for credit scoring based on Big Data, AI and machine learning, as well as in SaaS solutions, PaaS solutions, and payment services.
“The vast majority of fintech investments is going to a small number of well-known startups. But there are many more high-quality fintech projects all over Europe seeking capital,” commented Boris Batin, co-founder and CEO at ID Finance. “We see a huge opportunity in supporting these companies while providing a superior risk-adjusted return to investors.”
FinTech Credit Fund expects to reach its $200 million target by the end of 2017, with the first investment deals being carried out in parallel, said Dmitry Gorokh, ID Finance’s Head of Communications, in an exchange with East-West Digital News.
The fund’s model is similar to that of Victory Park Capital or Marshall Wace Eaglewood MW Eaglewood and Ranger Direct Lending Fund in Western countries. But FinTech Credit Fund is the first investment vehicle of its kind in Eastern Europe, says Gorokh.
Russian billionaire to finance everyone
The creation of FinTech Credit Fund is coming just two weeks after Finstar, a global private investment group controlled by Russian billionaire Oleg Boyko, announced a $150 million plan to invest in fintech startups over the next five years.
Beyond financial technologies in the strict sense, the program will also target artificial intelligence and data science startups as well as insurance, advertising and marketing technologies. A part of the money will be used support R&D programs across the Finstar group.
“We believe there is a great opportunity to reinvent financial services so that they become more consumer-centric and fleetfooted, serving those whom the current financial services sector doesn’t serve or is ill-equipped to serve. And technology will be central to this,” Finstar’s press service stated in an exchange with East-West Digital News.
This investment program is geographically agnostic, “even though our current main markets are Europe, Latin America, and the broader APAC region,” the press service indicated. Over the past two years, Finstar has invested or developed partnerships with Europe-based fintech companies such as online lender Spotcap, fintech group Euroloan, P2P lending platform Viventor, a peer-to-peer lending platform, and adtech startup Rocket10.
AI and blockchain to disrupt finance
Several other fintech-oriented funds were launched recently in Russia:
- Earlier this week Viaduct Ventures, a new asset management company, announced a fund targeting fintech, Big Data and IoT with up to $50 million “to bridge early-stage startups from Eastern Europe with Silicon Valley.”
- In June Kapinvest 21, a VC company in Siberia, partnered with a group of Chinese investors to launch an investment fund through an ICO. This fund will target Blockchain and fintech projects in Russia and beyond.
- This past spring Larnabel VC, the venture arm of the Gutseriev family, and VP Capital, the fund of the prominent Belarusian businessman Viktor Prokopenya, launched a joint $100 million investment program targeting AI startups worldwide, with fintech as a key focus.
The latest investment under this program went to Capital.com, a trading app that is similar to Robinhood in the US but with specific AI-powered functions.
“Artificial intelligence can bring value wherever large volumes of well-structured data are available. Finance does have such data, in contrast with many other sectors where the benefits of AI are overhyped. We believe that the best investment banking products of the future will be based on a deep understanding of people’s mind using big data analysis and AI,” Prokopenya told East-West Digital News.
