Deutsche Bourse’s new dedicated fintech venture fund, DB1, is hoping to make up to five investments this year, focusing on startups that use technologies such as blockchain and machine learning to rebuild the rails on which financial markets are built.
The German exchange operator set up DB1 Ventures last year to institutionalise and professionalise its approach to investing in firms that can boost its technology and revenue footprint.
The unit’s managing director Ankur Kamalia says that DB looked into over 250 investment opportunities last year, before taking the plunge on a handful: distributed ledger outfit Digital Asset Holdings; API specialist figo; a joint venture with the Naga Group to create a marketplace for trading virtual gaming items; and an investment in the first German growth fund for fast-expanding B2B-software companies, Digital Growth Fund I.
This year, DB1 will look to make between three and five investments, each between EUR5 million and EUR15 million, in firms working in areas such as blockchain, security solutions, API technologies, cloud computing, machine learning and artificial intelligence.
“Our immediate focus is the data business and we are looking at new opportunities and companies within that space. The second thing we are focussing on for the next two quarters is new product or geographic optionality,” says Kamalia in a Q&A on the DB site.
On what the fund looks for in a company, Kamalia cites whether the tech and business ideas are relevant to Deutsche Bourse, the management team, and scalability.
“Let’s use figo as an example. With figo we have an opportunity to jointly participate in the creation of infrastructure technology solutions for the financial sector, which is relevant especially in the wake of the Payment Services Directive 2 (PSD2) for banks.
“Figo is expanding quickly and the business has relevance on global basis. Co-operating with them allows us to use their API technologies as part of our overall API economy. The management team is very strong and they have grown the business well in Germany thus far. Now, with us participating, they are able to scale up, and benefit from the credibility of a safe, secure and neutral infrastructure operator such as ourselves.”