Nasdaq Enters the Race to Attract Fintech Companies


April 21, 2017

Nasdaq announced on Wednesday it’s launching a dedicated venture investment unit to find the best fintech firms to collaborate with. While the investment program has unofficially been operating since the late-2015, the new unit will look to harness more long-term benefits to Nasdaq’s client base. It could also increase competition in the fintech sector in terms of investments.


Looking for disruptive technologies


Nasdaq has been investing in fintech companies since 2015 when it got stakes in blockchain infrastructure provider Furthermore, it also has stakes in Digital Reasoning, a machine intelligence business, and Hanweck, which is a real-time risk analytics company.


On Wednesday, Nasdaq announced it would deepen and enhance these investments and add an element of focus to its investment strategy. It has formed a formal division to find disruptive technologies in the fintech sector with Nasdaq Ventures. Adena Friedman, the president and CEO of Nasdaq, said the objective is to find fintech firms “who are developing unique technologies”.


Friedman went on to say Nasdaq wants to use the program to “accelerate the pace of innovation to ensure our clients continue to benefit from the technologies that are reshaping the capital markets”.


The initial focus areas for the venture investment fund will be blockchain firms, artificial intelligence companies, emerging and frontier marketplaces, as well as data, analytics and content aggregation. It, therefore, has a wide-ranging focus on technology firms.


Nasdaq Ventures will be managed by the Gary Offner from Morgan Stanley. Offner has a 20-year record working in private equity, venture capital and strategic direct investment so the venture investment unit is in good hands.


The expected investments by the fund will range from sub-$1 million to around $10 million and Nasdaq is likely to invest in both seed and late-stage venture rounds.


An expected and welcomed move


The US equities exchange has been going through a transformation in recent years. Nasdaq has been actively looking to become a diversified financial technology company. Its decision to enter the fintech sector is not surprising, especially since the firm has been investing in disruptive technologies previously.


Indeed, analysts welcomed the venture investment unit. USB’s equity analysts told the Business Insider, “Nasdaq’s business mix has continued to evolve, and as investors continue to shift their perception of Nasdaq to more of a financial technology company, we think the multiple will come to expand.”


Nasdaq has a positive outlook on the state of fintech. In a post published in February, the firm listed a number of predictions for the industry in 2017 and suggested the sector will continue to grow as more people benefit from the technologies.


However, the firm did also point out to the challenges facing the sector – regulation being the top hurdle in the way of a true fintech revolution. Nonetheless, the latest investment unit will continue to push the sector into public consciousness and make investors fight for the right deals.

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