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Swedish investor NFT Ventures has partnered with Finnish media corporation MTV to launch a new fintech fund in Finland.
The fund will invest in technology startups that target the banking sector, and will provide cash and media coverage in exchange for equity.
“Finland has many interesting startup companies, especially in the gaming industry,” Johan Lundberg, CEO at NFT Ventures, told Computer Weekly. “We are looking to identify fintech companies very much influenced by [the success of] the gaming industry.”
NFT’s fund is targeting early-stage startups that contribute to the “transformation process of banking” and already have some cashflow. The fund expects to announce its first Finnish deal during the first quarter of 2016 and plans to build a portfolio of up to nine investments over the next two years.
“We define fintech as more or less all the products and services a bank could offer,” said Lundberg. “That means approximately 400 to 600 products where we could invest. We have no specific target [areas inside fintech], and I would like to see us to look broadly into all transaction-based companies.”
NFT’s average investment is about €1m, rising to €2m, and includes a combination of cash and media visibility from MTV. The fund’s typical equity is between 20% and 25%.
This is a familiar model for NFT. The venture capital firm has been investing in fintech companies in Sweden since 2014, backed by an undisclosed amount of funding from Swedish media conglomerate Bonnier. NFT’s partnership with MTV – Bonnier’s Finnish arm – is a continuation of the collaboration.
“This co-operation benefits everyone, from the entrepreneur that is provided with a wide array of marketing tools, to the fund and its investors, “ said MTV CEO Jarkko Nordlund.
NFT currently has 14 fintech companies in its portfolio in Sweden and plans 10-12 further investments in the next 18 months.
NFT Ventures sees fintech, especially banking, as one of the last industries to undergo major transformations such as those in industries including printed media and the mobile sector.
Read more about startups in the Nordics
- The Nordic region is a hotbed for IT startups and, while it is better known for consumer-targeted creations such as Angry Birds, there are more and more startups targeting businesses.
- Nordic startups are targeting the mobile market with software to help customers create apps as demand from businesses in their home region and beyond grows.
- A UK network that supports the IT startup community is attempting to emulate its activities in the Nordic and Baltic regions.
“Banks will need to change,” said Lundberg. “They will probably be the ones who will use these new services [the most], because they won’t have the time and energy to develop everything by themselves.
“What is also important to note is that a bank cannot be on top of 400 or 500 products – it needs to buy and outsource solutions from others.”
And the banking industry has started to take notice. For example, Nordea Bank in the Nordics and Barclays in the UK have already launched accelerator programmes for fintech startups.
Europe as a whole saw a 215% year-on-year increase in fintech investments in 2014, totalling $1.48bn. The highest levels of investment were in the UK and Ireland ($623m), followed by the Nordics ($345m).
But this is just the beginning, said Lundberg. “The whole transformation of banking will probably take 10 to 15 years – it will take time.” .................................