Private equity firm Finstar Financial Group has announced a strong commitment to fintech. The Moscow-based firm is planning to invest $150 million in fintech startups in the next five years.
Targeting high growth SMEs
The private equity group is planning to target high growth SMEs and provide help to its portfolio companies in terms of R&D. Finstar has been operating since 1996 and it has previously targeted markets in Europe, Latin America, Southeast and South Asia. It will be eyeing similar markets with its fintech investments.
Oleg Boyko, the founder and chairman of Finstar, said in the official statement, “We have actively been exploring the opportunities UK and European FinTech have to offer, and we think there’s more to come”.
Each year, the firm plans to close three to six investment deals. The aim is to focus on seed and Series B stage startups. According to Tech City News, Finstar is looking to make investments ranging from $500,000 to $30 million. In terms of the technologies and innovations, the private equity firm is interested in artificial intelligence, data science, AdTech and MarTech industries.
Moves have already been made
The firm has already started investing in the fintech space. In November, Finstar hired Mark Ruddock from Wonga to be in charge of its FinstarLabs. The investment vehicle is the special-purpose vehicle aimed at expanding the PE firm’s fintech portfolio.
Boyko said in the statement, “Our R&D investment is about pushing financial technology further and leveraging that innovation across our already strong fintech portfolio. This means that – beyond our financial commitment to the sector – the businesses we work with benefit from the strength of our technical resources and the depth of our expertise.”
In recent months, Finstar partnerships and investment have followed the above strategy. The firm established a partnership with the online lending platform for SMEs, Spotcap. It has also made deals with Viventor, which is a peer-to-peer lending platform, and the Northern European fintech firm Euroloan.
In 2015, Finstar even set up its own portfolio company, Digital Finance International. The aim then was to apply advanced technological solutions to consumer lending opportunities globally.
Fintech continues to attract
According to CB Insights’ Global Fintech Report 2016, the interest in fintech startups has continued to grow. According to the report, the industry is currently worth $12.7 billion and the start of the year has witnessed plenty of activity.
DealMarket has previously noted traditional banks’ interest in developing fintech capabilities and even national governments have set up fintech labs. This shows the industry is worth taking seriously, according to a Forbes article from February. Rohit Ahora wrote in the post, “When traditional players adopt a new way of doing things, it shows long-term potential.”
Fintech startups in industries such as artificial intelligence and blockchain technology are likely to continue attracting an increasing amount of interest. Considering the amount of dry powder in the private equity sector, Finstar is likely to receive plenty of competition for the right startups from other PE firms in the coming months.