German exchange owner Deutsche Boerse is wrapping up its investments in financial technology companies into a standalone venture capital fund and will ramp up its funding in fintech firms, joining the rush of corporates eyeing a slice of disruptive startups.
DB1 Ventures will include a handful of existing investments, including a stake in Blythe Masters' blockchain startup Digital Asset Holdings, some of which may be extended, while it will seek out new ones which can drive innovation at the group, which is about to merge with the London Stock Exchange in a £21bn deal.
These include areas such as blockchain and distributed ledger technology, trading platforms, machine learning and predictive analysis, robo-advisory, post-trade technology such as risk management and compliance, as well as alternative funding platforms and big data.
The investments will primarily be early to growth stage global fintech firms, with DB1 as either as a lead or co-investor and taking minority or controlling stakes, while funds will initially come from Deutsche Boerse.
"Our objective with DB1 Ventures is to continue to be active in investing in early to growth stage ventures which are core or adjacent to our client, product, geographic and technology strategy," said Deutsche Boerse chief executive Carsten Kengeter, who will chair a new investment committee overseeing the new arm.
DB1 will be headed up by Ankur Kamalia, a former UBS investment banker in London. He said: "This dual approach will allow us to bring in our professional expertise as a market infrastructure provider and offer value creation opportunities for fintech companies.
"In return, we will benefit from new ideas and technological developments in an early stage. Simultaneously, we continue to actively manage our existing portfolio of investments, including divestments where necessary.”
He will be joined by Victor Hugo Gomez and Monika Fuchs as senior vice president and vice president of ventures, respectively, at the Frankfurt-based fund.
Around a quarter of all fintech startup investments now come from corporate venture funds, with Citigroup, Goldman Sachs and JP Morgan the most active financial institutions, according to CB Insights and KPMG.
However, in Europe corporate fintech investors are far less active, accounting for just 15 per cent of deals and dropped to just 10 per cent in the last quarter of 2015.