Fintech companies will be a key focus for Klarna and Spotify-backer Northzone as it announces a brand new €300m venture capital fund to invest in early-stage European startups.
Speaking to PaymentEye, London-based Northzone partner Jeppe Zink says the firm is particularly interested in mobile-first models, e-commerce, fintech and B2B software-as-a-service.
Northzone’s fintech portfolio already includes Stockholm-based mobile payments firm iZettle and online payments processor Klarna, plus London-based Market Invoice.
Northzone also invested in Auka, formerly mCash, an Oslo-based white label service that helps financial institutions launch their own mobile payments services.
Another fintech company in Northzone’s portfolio is Qapital, based in New York. This is a personal banking service aimed at millennials to help money management, budgeting and learning to save.
While this is a sector that has attracted a lot of new entrants, investment and hype, Zink says he believes that innovation in the traditional finance and banking space has only just begun.
“Despite the growth of this sector in the last few years, we are still just scratching the surface on what is a huge industry,” says Zink.
“We are particularly interested in the’“second wave’ of fintech companies, ones that are addressing hot topics around compliance, as well as related sectors like insurance where there is ample scope to innovate with better services and business models.”
How important is it, today, where a startup is based?
The UK’s position as a top location for fintech and traditional financial services companies in Europe was thrown into question back in June when the country voted to leave the EU.
So has the Brexit vote had any impact on how Northzone looks at the UK as a place to build and scale fintech?
For now, there is no change, says Zink: “We hope and believe that the UK will continue having close economic ties with Europe including free movement of labour and trade which is vital to attract and build great businesses.”
Meanwhile, looking to the Nordics, which has produced many of Europe’s most significant fintech startups so far, Zink says the success of businesses like Klarna and iZettle is encouraging others to start companies in this space too.
Will we start to see more fintech companies scaling from the Nordics like Klarna and iZettle?
“Nordic companies have a tradition of rapid international scaling, by virtue of small home markets,” says Zink. “In fact, some companies, like our Swedish portfolio company Qapital, bypassed the Nordics altogether, and launched in the US as their first market.”
In an increasingly global market, then, how important is it today where a startup is based?
“Startups today are more globally connected than ever,” says Zink. “We focus on a number of key hubs that are all producing outstanding companies: the Nordics, Berlin, London and New York since great talent attracts other great talent which is how Silicon Valley thrives. But entrepreneurs have a habit of non-conforming so great companies can grow from anywhere.”
Fund eight is the Nordic VC firm’s biggest to date and was reportedly oversubscribed “once again” according to the press release.
Exits from the firm’s portfolio this year include the IPO of Tobii and sale of Avito.
“Despite the turbulent market conditions, this has been our fastest fundraise ever, coming on the tail of a great year returning significant funds to our investors,” says Zink in a press release announcing the fund.
“For the past 20 years we had the honour of being chosen as a partner for growth by entrepreneurs who have had a transformative effect on the European tech scene. This new fund enables us to continue our work supporting the best companies.”
The firm has offices in Stockholm, London, New York and Oslo.
The fund recently announced it was promoting Jessica Nilsson, co-founder of HelloFresh to partner in Stockholm. Meanwhile the firm also added Michiel Kotting as a partner from Accel in London. New additions to the investment team will also include Christopher Steinau, co-founder of uncover, in London and Wendy Xiao Schadeck, co-founder of CoHatchery, in New York.
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