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 third in a series, is focused on Capital Markets & Asset Management (CM & AM). CM & AM includes the asset issuance, investing, trading, and post-trading life cycle of investable assets, as well as new marketplaces, tools, and infrastructure. Technology promises a revolutionary shift in the financial services sector, a departure from incremental, evolutionary product development that has largely defined CM & AM until now. CM & AM will undergo market structure transformations characterized by shifting data asymmetries between actors, the rise of new digital asset classes, and a reduced reliance on centralizing agents. We believe that these changes will create avenues for the emergence of new products, marketplaces, and platforms for engagement between providers and consumers of financial products, creating a virtuous cycle of innovation. For example, the automation of trade processing and post-trade clearing and settlement via DLT will provide significant capital savings and cost efficiencies to both the buy and sell side, while also decreasing friction, minimizing operational risk, and boosting transparency—key aims of regulators. Fundamentally, the emergence of a digitally-native infrastructure will quicken the pace of digitization. Just as liquidity begets more liquidity, digitization will drive more digitization. The joint application of cloud computing, APIs, SaaS models, advanced data analytics and DLT post-trade infrastructure will usher in an era of open capital markets and open asset management akin to the open banking trend. Similarly, friction and costs will be reduced, and markets will become more open and accessible which will exponentially increase liquidity and the velocity of transactions. While this dynamic is inherent to the growth of a cross-section of asset classes, we expect that the scale and scope of these changes driven by a fundamental rewiring of the CM infrastructure will be unprecedented. MGV has already invested in five companies that are championing trends across various subsectors in this space (Coinfirm, Keyrock, Nivaura and Next Gate Technologies). Our research has uncovered over 950 other early stage startups attacking the opportunity across the multiple vectors outlined below. Simply put, there is significant energy and resources be putting to work across the capital markets and asset management landscape. Seven MGV Focus Trends in Capital Markets & Asset Management 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:
3D Finance These focus trends in Capital Markets & Asset Management 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. Conclusion
If you are a high-potential pioneering startup in the CM & AM ecosystem or if you are an incumbent seeking to identify opportunities within this ecosystem, 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 FinData and ESG (also see our first two posts in this series on Open Banking and OmniFi). Acknowledgements In addition to the MGV team, underlying research credit goes to Antonin Gury-Coupier, with support from Inder Takhar and Matt Lobel.
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We are pleased to announce our newest investment in Keyrock, a liquidity management and market making service provider to the digital assets space. Here is a key quote from one of our Managing Partners, Pascal Bouvier, from the Keyrock press release: "One of our core themes at MGV is the rise of digital assets as the next evolutionary step for capital markets and asset management. For us, true rise of digital assets (crypto, endogenous to a protocol, tokenized representations of physical or financial assets) implies new market structures, new pre-issuance, issuance and post-issuance processes. That is why we firmly believe in Keyrock and are very excited to invest in them, as they are building the foundation for liquidity management and market making of these new assets going forward." You can find the Keyrock press release here: ![]()
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. OmniFi 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:
3D Finance 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). Acknowledgements In addition to the MGV team, underlying research credit goes to Inder Takhar, with support from Matt Lobel. |
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