Steve Gotz’s Post

𝐖𝐡𝐲 𝐆𝐂𝐂 𝐁𝐚𝐧𝐤𝐬 𝐒𝐡𝐨𝐮𝐥𝐝 𝐃𝐨𝐮𝐛𝐥𝐞 𝐃𝐨𝐰𝐧 𝐨𝐧 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐕𝐞𝐧𝐭𝐮𝐫𝐞 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐈𝐧𝐬𝐭𝐞𝐚𝐝 𝐨𝐟 𝐕𝐞𝐧𝐭𝐮𝐫𝐞 𝐁𝐮𝐢𝐥𝐝𝐢𝐧𝐠 In the dynamic financial landscape of the GCC, innovation is no longer a “nice-to-have” but a necessity. As banks explore various avenues to accelerate #innovation—ranging from venture building to venture studios and Corporate Venture Capital (CVC)—it’s time to take a hard look at where the focus should be. While these strategies may appear complementary, the internal and external realities of the GCC banking sector make a compelling case for banks to prioritize #CVC investments. Here’s why: 🟡 The Speed of Innovation Matters Building ventures from scratch, is a long-term game. In contrast, CVC #investments enable banks to tap into the innovation of startups that are already operational, reducing the time to impact 🟡 Monetary Muscle Can Be a Game-Changer GCC banks are among the best-capitalized in the world. With substantial balance sheets and strong #liquidity, they have the financial firepower to make meaningful investments. Rather than deploying resources to create #ventures — often with uncertain outcomes—banks can flex their monetary muscle to partner with or acquire startups 🟡 Access to a Global Innovation Network CVC investments provide a gateway to global innovation ecosystems. By participating in funding rounds, #GCC banks can establish partnerships with global startups 🟡 De-risking the #Innovation Agenda Building ventures internally puts significant operational and reputational risk on the bank. Failed ventures can also damage the bank’s credibility. CVC investments spread the risk by creating a portfolio of diverse bets 🟡 Complementing, Not Competing with, the Startup Ecosystem Venture building strategies can unintentionally place banks in competition with #startups - by investing in startups, banks can strengthen their relationships within the fintech community 🟡 Faster Go-to-Market with Proven Ideas Startups often have the agility and focus to bring innovative products to market quickly. Through CVC, banks can identify proven ideas, invest strategically, and integrate those solutions into their platforms 🟡 Aligning with Regional Trends Governments across the GCC are prioritizing #startup #ecosystems and #digital #transformation as part of their national visions. Banks can align with this macro trend by channeling resources into CVC, demonstrating their commitment to supporting innovation A Call to Action for GCC Banks While venture building and studios have their merits, the realities of the GCC banking sector and the pace of global innovation necessitate a more pragmatic approach. #CVC offers a faster, lower-risk, and higher-impact path to innovation, enabling banks to deliver value to their customers and shareholders What do you think? Are CVCs the smarter play for banks in the GCC? Let’s discuss in the comments.

SC Ventures by Standard Chartered and NEXT176 to Launch a Wealth Platform That Makes Financial and Wealth Planning Accessible to All “The UAE and the Middle East are emerging as one of the leading destinations for wealth management globally — whether it’s high net worth income population, Millennials, or Gen Z — there is demand for technologically advanced and highly-customised wealth management tools supported by ongoing financial education,” said Benito Mable, Venture and Strategic Partnerships Lead based in the UAE, SC Ventures. “The assets under management (AUM) in the Middle East rose 16% to US$1.2 trillion in 2022, according to BCG. The region is expected to grow further and remain the fourth-largest wealth hub in the world making UAE a perfect market for our base.” https://lnkd.in/exNh6hGn Alex Manson Vuyo Mpako #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews

FinTech Australia to Bolster Its Support for the Industry With New Leadership Appointments Commenting on the appointment, Rehan Mark D'Almeida said: “It’s an incredible honour to be recognised as FinTech Australia’s CEO — my career has grown alongside the industry. We’ve seen FinTech Australia reach new heights in terms of engagement with both members and policy-makers, all with a small dedicated team. Crucially, that’s translated into commercial success for the sector. According to the last FinTech Australia, EY Census, over 81% of fintechs have hit profitability and are growing revenue — up from 77% in 2019.” “We face new challenges ahead as the FinTech industry continues to navigate complex regulatory frameworks and steers towards helping society address larger challenges such as climate change. But it’s an exciting time for the sector, and it’s bigger and more vibrant than ever before.” https://lnkd.in/eufpZ7YY Paypa Plane Simone Joyce Sarah Gorman #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews

There’s a scary trend I’m seeing in #Australia #fintech that I’m just not seeing anyone talking about. So I guess I’ll get the ball rolling. It started last year with the FinTech Australia EY #census that showed only 3% of responding fintechs were started in the past 3 years. Even assuming that’s off by half, it would mean only ~60 new fintechs were started since 2021. Yesterday Cut Through Venture delivered their Q2 2024 report (it’s excellent, and I honestly believe they’re doing the best startup data in the region atm) and fintech was highlighted heavily. So what did we learn? The good news: Fintech was the largest investment area by industry, with $546m in funds raised. That's good right? The bad news: That was split across only six deals, of which 97% ($528m) went to three mega deals, including more than half to Betashares’ $300m raise. Of the remaining $18m, Bridgit closed a $14m Series A, leaving only $4m for two early stage deals. There is a growing chasm for early stage funding in the #fintech industry, at a time when the same report declares that early stage funding across #startups has “bounced back” from its low last year. According to the data, fintech only accounted for 3% of <$5m rounds, 4% of $5-20m rounds, and 0% of $20-50m rounds. This compared to a four quarter run from Q2 ’22 - Q2 ’23 when fintech had the most deals AND the most funding. So is it a deal flow problem, with less good fintech companies searching for funding? Or is it a something else stopping investors from investing into the sector? PS - I’ve been extraordinarily quiet over the past year as we’ve been heads down working on our new fintech fund (which should tell you where I stand on the opportunity in the industry). Nothing to announce yet, but we want to hear what you’re observing to help bring these numbers to life

💡 𝐕𝐂 𝐢𝐧 𝐭𝐡𝐞 𝐔𝐊 – Q3 2024: Summary 👉 𝐕𝐞𝐧𝐭𝐮𝐫𝐞 𝐟𝐮𝐧𝐝𝐢𝐧𝐠 𝐬𝐥𝐨𝐰𝐬: The latest Dealroom.co report in partnership with HSBC Innovation Banking, highlights UK venture funding hit $2.9bn in Q3-24 - the slowest quarter in four years and nearly half of the $5.7bn invested in Q3-23. The decline? A sharp drop in late-stage mega rounds ($100m+). 👉 𝐄𝐚𝐫𝐥𝐲-𝐬𝐭𝐚𝐠𝐞 𝐟𝐮𝐧𝐝𝐢𝐧𝐠 𝐫𝐞𝐦𝐚𝐢𝐧𝐬 𝐬𝐭𝐞𝐚𝐝𝐲: Despite the slowdown, early-stage investment (Pre-Seed to Series A) has held stable since 2023. Early-stage investments have the potential for high rewards, as company valuations are lower and opportunities for value creation are typically at their highest.   👉 𝐒𝐞𝐫𝐢𝐞𝐬 𝐁 & 𝐂 𝐬𝐡𝐨𝐰 𝐩𝐫𝐨𝐦𝐢𝐬𝐞: The breakout stage (Series B and C) encouragingly was ahead of Q3-23, suggesting that decent scalable businesses continue to be funded 👉 𝐔𝐊 𝐕𝐂 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐢𝐧 2024 is currently tracking in line with 2023. 🚀 𝐏𝐨𝐬𝐢𝐭𝐢𝐯𝐞 𝐨𝐮𝐭𝐥𝐨𝐨𝐤 𝐟𝐨𝐫 2025: UK-based VCs are on track to raise a record-breaking $12.2bn of fresh capital by the year-end ($9.0bn raised by Q3-24), surpassing the pandemic boom and setting the stage for a brighter year ahead. 👉 Full report here: 👇 https://lnkd.in/e2h6MA95 Mat Lauren #VC #Startups #Investors #Funding #VentureCapital #Entrepreneurship #UKInnovation #HSBCInnovationBanking

Key trends include resilient seed-stage investments 💪

Fintech is back on TOP in the UK tech investment sector according to HSBC Innovation Banking! 🇬🇧 💪 🥇 💷 The UK remains NUMBER ONE destination in Europe for startup innovation AND investment while remaining third globally with $1.4B raised across 73 rounds including notable late-stage rounds for Monzo Bank, Flagstone and PPRO...lets just say fintech is BACK! 🌍 💰 More than half of the UK's VC comes from investors from overseas, which shows the UK remains a WORLD-CLASS destination for tech investment. 👨💻 Simon Bumfrey, Head of Technology and Life Sciences at HSBC Innovation Banking UK said: “This data reflects a busy start to the year for the UK innovation ecosystem – from growth in investment in established and emerging areas like fintech and quantum computing to expansion of regional tech hubs across the length and breadth the country, there is much to celebrate. We remain optimistic and excited about UK innovation in 2024 and are committed to supporting and partnering with innovators, investors and the broader ecosystem.” Read more on the link below! 👇 #hsbc #fintech #fintechnews #ukfintech #techhub #uktech #venturecapital #vc #fintechinnovation #digitalbanking #fintechstartup #techinvestment #financetechnology

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@FSDAi Nyala Facility BV, a facility set up by FSD Africa Investments to invest in emerging local capital providers is injecting US$1 million into Africa-based specialist VC fund First Circle Capital. Run by former entrepreneurs and fintech executives Selma Ribica and Agnes Aistleitner Kisuule, First Circle invests in the continent’s most promising early-stage financial technology companies, leveraging the partners’ industry network and expertise with an angel investment track record at 33x MOIC. First Circle Capital Circle focuses on #insurtechs, #financial infrastructure and #climatefintechs. Other areas the fund invests in is fintech Software as a Service (SAAS), Reg Tech and Alternative Lending Model firms. The team has built a portfolio of 13 investments so far in these areas, across 7 African markets. Announcing FSDAi Nyala Facility’s investment, FSDAi’s Chief Investment Officer, Anne-Marie Chidzero said: “We are thrilled to back this promising GP team of remarkable female investors. First Circle stands out in the market as a thesis-led specialized fund with great depth of expertise and strategy in the fintech sector. We believe that FSDAi Nyala Facility’s backing will catalyse more institutional LPs into First Circle Capital Africa Fund I”. According to BCG and the recent QED report, Africa is the fastest growing fintech region in the world, expected to grow its revenues by a staggering 13x by 2030. In Africa, fintech is well posed to resolve financial services access issues for the continent’s excluded and underserved population and SMEs, and to address its young population’s needs. Most Africans’ first interaction with the financial services sector may be through their smartphones, and BCG projects a fintech revenue CAGR of 32% until 2030, with South Africa, Nigeria, Egypt, and Kenya being the key markets. Selma Ribica and Agnes Aistleitner Kisuule , Co-Founding partners of First Circle Capital commented: “Expanding access, availability, and stability of financial services for African consumers as well as SMEs is critical for economic development and social resilience. The majority of fintech funding to date has gone into payments, hence investing in the next layer of financial services poses a significant opportunity. We are investing in Africa’s most innovative entrepreneurs building the next layer of financial products, that enable and expand access to financial services for individuals and SMEs across Africa. https://lnkd.in/d8cbHExc

The market is maturing at a rapid pace, and I believe the governments have taken note of the gaps in the funding landscape, They are trying to address the gap in SME/startup financing through banks, by skipping them altogether and heading to online lending platforms, digital banks (like Wio), and investing in capital & debt funds. It’ll take more time to break the risk barrier with banking insititutions used to “negligible risk” balance sheets.