We are pleased to announce our latest investment in Wayflyer as they scale their differentiated platform for ecommerce merchants. The company is at the forefront of innovative Open Banking technology solutions that bridge big data analytics with customized financial products to help clients grow faster and more economically.
View the company's announcement for further details.
As we begin to put money to work in our latest fund at MiddleGame Ventures (“MGV”), we have completed a series of deep dive reviews of the FinTech startup landscape in B2B and B2B2C financial services to help structure how we prioritize our efforts across the broader fintech ecosystem. This blog, the second in a series, is focused on OmniFi. OmniFi is our term for the financial services spectrum spanning the current centralizing characteristics from Centralized Finance (CeFi) to the emerging power of Decentralized Finance (DeFi) while encompassing a host of applications (tokenization, fractionalization) that are being built on top of blockchain systems.
This next decade of OmniFi, and therefore FinServ, will usher in fundamental shifts in market structure and data asymmetries through increased decentralization (more open source, more disintermediation, more distribution) driven by leaps in infrastructure-layer innovation. However, we do not believe in extreme decentralization (where value may accrue incongruously) nor in status quo centralization (where value may accrue in a black box), but in a merging of the two into more efficient, more open financial systems – hence, our term OmniFi.
To clarify, we do not believe that one system or governing structure (CeFi or DeFi) will “win” – hence, we are not “maximalists” or proponents of one system at the expense of the other. Rather, we believe the main ecosystems that comprise OmniFi will converge over time into something better. Further, we believe that many aspects of OmniFi will significantly impact Open Banking and similar movements in capital markets, asset management, and other verticals to create a true era of Open Finance. Better said, OmniFi is the transitional competitive milieu over the next decade that will lay the groundwork for Open Finance.
For example, new ways to issue assets (tokenization, digitization, blockchain/DLT) will lead to new asset classes, driving a drastically different value chain in capital markets and asset management, helping pave the way for new frameworks to drive financial innovation outside legacy systems and infrastructure.
MGV has already invested in two companies that are championing trends in this space (Coinfirm, Nivaura, and Keyrock). Our research has uncovered nearly 400 other early stage startups attacking the opportunity across multiple vectors employing a cross-section of technologies (DLT, Ai, RPA, Data Analytics). Simply put, there is enormous talent and energy focused on innovating the core infrastructure of the financial system. This is a natural evolution from the exponential rise of bitcoin and cryptocurrencies, to NFTs, to the ICO craze, to now: a serious rebuild of infrastructure by fantastic teams attacking real opportunities.
Seven MGV Focus Trends in OmniFi
We have organized our research and investment efforts around seven key trends that will transform a cross-section of functions within and beyond the financial services landscape:
These focus trends in OmniFi tie into MGV’s “3D Finance” meta thesis, which encompasses the transformation of financial services around a core of Digital, Distributed and Data-Driven processes. Within the 3D Finance construct, we have further developed investment themes that focus our attention on the transformation that is just beginning to unfold across the financial services industry, many of which were highlighted on MGV’s introductory blog.
If you are a high-potential pioneering startup in the OmniFi ecosystem or if you are an incumbent seeking to identify opportunities within these emerging ecosystems, please reach out to us. We are committed to supporting the transformation of financial services over the next decade and welcome any and all feedback and opportunities to engage constructively on a shared vision for the future of financial services.
Stay tuned for follow up posts on additional verticals of interest to the investment team, including: Capital Markets & Asset Management, FinData, and ESG (also see our initial post in this series on Open Banking).
In addition to the MGV team, underlying research credit goes to Inder Takhar, with support from Matt Lobel.
As we at MiddleGame Ventures (“MGV”) begin to put money to work in our latest fund, we have completed a series of deep dive reviews of the FinTech startup landscape in B2B and B2B2C financial services to help structure how we prioritize our efforts across the broader fintech ecosystem. This blog, the first in a series, is focused on Open Banking (OB).
Open Banking, seeded by forward thinking regulation in the UK and EU (PSD2) and accelerated by new technologies and customer preferences, is redefining the role of global banking services and opening up a host of new businesses along the way. MGV has already invested in two companies that are championing trends in this space (Minna Technologies and Railsbank). Our research has uncovered over 500 early stage startups attacking the opportunity across multiple vectors including middleware technology providers, platforms, and privacy tools. In short, there is a lot of energy and opportunity in this space.
Over the past decade, the banking paradigm has radically changed with the rise of dozens of new channels and platforms that are disintermediating traditional providers of banking and payments services and broadening the scope of customer engagement (e.g., SMEs). As these trends play out, we believe the payments and application layers in the OB ecosystem are best positioned to benefit, while incumbent banks will need to revaluate and reinvigorate their value proposition. Whereas, other non-traditional financial verticals stand to benefit from the expansion of payments and finance rails.
Customer expectations (transparency, tailor-made products, omni-channels), new entrants (big tech, fintechs, neobanks), new technologies (API integrations, cloud banking, DLT), and regulations (PSD2, GDPR) are the core enablers for OB and will drive the expansion of OB-like innovation beyond the banking and payments sectors. As OB schemes proliferate, Open Finance and Embedded Finance will dominate the future of FinServ, leading to the emergence of a meta financial universe that blurs the financial and non-financial sectors (more to come on these themes later).
Six MGV Focus Trends in Open Banking
We have organized our research and investment efforts around six key trends, that implicate payments and banking, in addition to other financial services verticals:
These trends in Open Banking and beyond tie into MGV’s “3D Finance” meta thesis, which encompasses the transformation of financial services around a core of Digital, Distributed and Data-Driven processes. Within 3D Finance, we have further developed investment themes that focus our attention on the transformation that is just beginning to unfold across the financial services industry, many of which were highlighted on MGV’s introductory blog.
If you are a high-potential FinTech startup attacking core pieces of the Open Banking/Open Finance value chain or if you are an incumbent seeking to identify opportunities within these emerging ecosystems, please reach out to us . We are committed to supporting the transformation of financial services over the next decade and welcome any and all feedback and opportunities to engage constructively on a shared vision for the future of financial services.
Stay tuned for follow up posts on additional verticals of interest to the investment team, including: Capital Markets & Asset Management, FinData, ESG, and OmniFi (our term for the spectrum of blockchain and DLT based centralized to fully decentralized finance).
In addition to the MGV team, underlying research credit goes to Antonin Gury-Coupier, with support from Inder Takhar and Matt Lobel.
We are pleased to announce our latest investment in Coinfirm. Coinfirm is a blockchain data analytics and compliance startup led by a very strong team of professionals and experts in the fields of data science and financial services compliance.
MiddleGame Ventures is pleased to announce its latest investment in Next Gate Tech (NGT), a Luxembourg based fintech startup. NGT is specialized in smart automation of middle and back office processes in the fund administration and asset management industries.
MiddleGame Ventures Announces €150m FinTech-Focused Fund
~ fund achieves first close and targets early stage financial services technology pioneers ~
Luxembourg, Nov 25 – MiddleGame Ventures (MGV), a fintech-focused investment firm, announced today that it had raised a new fund targeting post-seed, series A and series B lead investments in Europe and North America.
MGV’s Venture Fund I has achieved its first close, with a final close target size of €150MM. It will invest in and partner with B2B and B2B2C startups driving the transformation of financial services from analog to digital and from centralized to decentralized, with an emphasis on middleware and back office solutions. Its remit extends to enabling technologies such as RegTech, Digital Identities, “FinData” and crypto-enabled infrastructure across banking, asset management, insurance, payments, and capital markets.
The Luxembourg Future Fund (LFF) and the European Investment Fund (EIF) are anchor investors in the new MGV fund, whilst S&P Global is included among other institutional, strategic and family office investors. The fund remains open to additional institutional and private investors ahead of a final close later in 2020.
FinTech investment veteran Pascal Bouvier is co-founder of MGV along with Michael Meyer and Patrick Pinschmidt. Pascal said: “We are pleased to have new capital from substantial investors to support great, transformational businesses across Europe and the US with our highly focused fund. Our investors agree that specialist funds with experience working with entrepreneurs, incumbent financial institutions and regulators are best placed to thrive in an environment characterised by financial and technological cross-currents and significant regulatory constraints. We are excited to put our platform to work on behalf of investors and the next wave of innovators solving hard problems and re-architecting the industry.”
Patrick Nickels, chairperson of the Luxembourg Future Fund Board of Directors, added: “We are pleased to be an investor of MiddleGame Ventures fund aiming to support early stage FinTech companies. The Luxembourg Future Fund believes this commitment will help to strengthen the FinTech industry in Europe and generate positive spillovers in Luxembourg. This is a strategic sector for Luxembourg for economic diversification and we are delighted to contribute to its continuing development.”
“We are delighted to be supporting MiddleGame Ventures as an anchor investor in its new fund," said the EIF’s chief executive Pier Luigi Gilibert. “The EIF has a strong commitment to innovation in Europe, and we hope that this fund, with its focus on FinTech entrepreneurs, will assist us in that goal.”
MGV partners have invested over USD $300 million in early stage financial services firms over the past decade including Ripple, Tandem Bank, SimpleSurance, Coverhound and CompareAsia. MGV’s new fund has already made three representative investments in a capital markets digital platform and banking as a service and big data analytics startups in the UK (Nivaura, Railsbank and Gardenia Technologies).
About MiddleGame Ventures
MiddleGame Ventures (MGV) is a leading financial services technology venture capital firm. Its focus is on supporting innovation in the financial sector as organisations reinvent themselves to compete and service clients in the digital age.
Central to MGV’s thesis is that disruption in banking, payments, capital markets, asset management and insurance business models by new intermediaries will drive a fundamental re-architecting of incumbents and create entirely new value chains.
MGV is well-positioned to help this financial services renaissance based on the founding team’s extensive investment, operational and regulatory experience.
MGV was established in 2018 by Pascal Bouvier, Michael Meyer and Patrick Pinschmidt. Bouvier and Meyer have substantial FinTech investment experience having co-founded Route 66 Ventures and consulted with Santander InnoVentures. Pinschmidt was a senior official at the US Treasury Department following a decade as a sell-side research analyst covering financial services for Morgan Stanley and Merrill Lynch.
MGV is headquartered in Luxembourg with offices in Dublin and Washington DC.
MGV also owns and operates NadiFin, a growth stage accelerator for European startups (www.nadifin.com) based out of Luxembourg.
For more information on the MGV team, strategy and portfolio, please visit www.middlegamevc.com.
About the European Investment Fund
The European Investment Fund (EIF) is part of the European Investment Bank group. EIF’s central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
About the Luxembourg Future Fund
The Luxembourg Future Fund (LFF) is a EUR 150 million equity fund set up in 2015 by the Société Nationale de Crédit et d’Investissement (SNCI) and the European Investment Fund (EIF) and combines a EUR 120 million commitment from SNCI with EUR 30 million from the EIF. In addition to its role as investor, EIF acts as the adviser of LFF, performing investment advisory, operational, reporting and execution tasks. The LFF invests in Venture Capital funds and co-invests in early and growth stage innovative technology SMEs. Its objective is to provide its investors with a risk commensurate return on investments while at the same time fostering the sustainable development and diversification of the Luxembourgish economy.
Telephone: (1) 202-750-4622
We are very pleased to announce that we completed the first close of our new fund. As every entrepreneur knows, fundraising has its own very special challenges, so this is an important milestone ahead of our final close later next year. We are now officially “in business” and are looking forward to investing in post-seed, series A and series B startups in Europe and North America. In anticipation of our first close, we have already made three investments in early stage fintech startups via a short term warehouse facility.
As part of our investment activity, Pascal Bouvier, one of our co-founders, will relocate to Luxembourg and oversee all MGV European activities, while co-founder Michael Meyer will remain in Washington DC and oversee MGV’s US activities. Our third co-founder, Patrick Pinschmidt, will focus primarily on Europe.
No matter where we are based, the three of us will be spending a lot of time on the road. Over the coming months we look forward to meeting b2b and b2b2c early stage startups in Europe and North America that are reinventing digital assets, data management and core systems (amongst other things) across the key verticals in financial services.
Finally, a special thanks to all those who have helped us get to this point. We are looking forward to the next phase of our journey with our excellent base of LPs, service providers, and ecosystem partners across our broader network. We are very excited about the road ahead. It is a pivotal time to be a venture investor in the market looking to back the best teams with the best ideas.
Facebook’s consortium project, Libra, has the potential to disrupt traditional business models in retail banking, payments, and retail asset management (in addition to regulatory and monetary policy). While there are many variables that will impact how this will all play out and there are significant technology, privacy, regulatory, and security concerns that could stop this project in its tracks, a meaningful new front has opened up in the evolution of western financial services that warrants discussion.
The Next Wave Of Fintech Will Be A Tsunami vs The First Fintech Wave
(Editorial Note: This is a high-level, big picture post that might not be suitable for hardened financial technology geeks. Don’t worry, we’ll have more for you in subsequent posts.)
It used to be that financial services intermediaries were to a large extent immune to outside innovation. While entire industries have been obliterated or reimaged over the last 30 years by waves of technological innovation (think retail, entertainment, or travel), financial services has remained relatively unscathed. Yes, electronic exchanges have replaced physical trading pits, online brokers and ETFs have replaced stock brokers, and cards have largely replaced paper checks. But even today, despite the hype around fintech, the core systems, operations, and players (outside of payments) remain fundamentally the same. We do not believe this will be the case a decade from today.
We are very pleased to announce the launch of Nadifin, a new European fintech accelerator. Nadifin will be based out of Luxembourg and will offer a yearly accelerator program based on multiple workshops in different European cities.
From time to time,