With the rise of Open Banking, PSD2 Regulation, insurtech and the whole, general fintech boom, tech investors have realized there is an increasing place for dedicated funds which double down on this ongoing movement. When you look at the rise of banking-as-a-service offerings, payments platforms, insurtech, asset management and infrastructure providers, you realize there is a pretty huge revolution going on.
European fintech companies have raised $12.3 billion in 2021 according to Dealroom, but the market is still wide open for a great deal more funding for B2B fintech startups.
So it’s no surprise that B2B fintech-focused Element Ventures has announced a $130 million fund to double down on this new fintech enterprise trend.
Founded by financial services veterans Stephen Gibson and Michael McFadgen, and joined by Spencer Lake (HSBC's former vice chairman of Global Banking and Markets), Element is backed by finance-oriented LPs and some 30 founders and executives from the sector.
Element says it will focus on what it calls a “high conviction investment strategy,” which will mean investing in only around a handful of companies a year (15 for the fund in total) but, it says, providing a "high level of support" to its portfolio.
So far it has backed B2B fintech firms across the U.K. and Europe, including Hepster (total raised $10 million), the embedded insurance platform out of Germany which I recently reported on; Billhop (total raised $6.7 million), the B2B payment network out of Sweden; Coincover (total raised $11.6 million), a cryptocurrency recovery service out of the U.K.; and Minna (total raised $25 million), the subscription management platform out of Sweden.
Speaking to me over a call, McFadgen, partner at Element Ventures, said: “Stephen and I have been investing in B2B fintech together for quite a long time. In 2018 we had the opportunity to start element and Spencer came on board in 2019. So Element as an independent venture firm is really a continuation of a strategy we've been involved in for a long time.”
Gibson added: “We are quite convinced by the European movement and the breakthrough these fintech and insurtech firms in Europe are having. Insurance has been a desert for innovation and that is changing. And you can see that we’re sort of trying to build a network around companies that have those breakthrough moments and provide not just capital but all the other things we think are part of the story. Building the company from A to C and D is the area that we try and roll our sleeves up and help these firms.”
Element says it also will be investing in the U.S. and Asia.