Seems there's plenty of activity around Berlin-anchored VC embedded/capital at the minute. Time passes fast for the hottest VC properties and just eight months on from the big reveal of embedded/capital's €100 million LP fund in March, the news is that it is being acquired outright by Motive Partners a NYC/London VC that's been growing its fintech track record, most recently with its $2.5 billion valuation bet on Amsterdam engagement banking platform Backbase.
News that Motive Partners had agreed to acquire embedded/capital emerged earlier on November 22.
The VC's head office said little on forward plans post-acquisition, aside from its "intent and belief" in the continued strategic value of early-stage deal making to private equity, particularly for the growth and buyout strategic playbooks.
In addition, the acquisition will be seen as further mana to the reputations of those helming embedded/capital's fund investments in recent months. Credibility gains will flow to the two investment principals, Harsh Govil and Maximilian Sauter, and everyone else right up to the firm's founder and managing partner Ramin Niroumand (renowned fintech-side for helping to launch the fintech company builder Finleap, and his founding investment in Berliner embedded finance bank Solarisbank.)
Embedded finance refers to integrating lending, payments and other financial products into an enterprise's internal IT infrastructure. The use cases suit large, global operations and also vertical specialties — for example Uber's use of own-branded credit cards for drivers, or the retail gift card APIs solution from incentive marketing startup WeGift, reported on by Tech.eu this time last week.
With its €100 million fund, embedded/capital has looked to get its money involved early, taking shares in pre-seed or seed rounds and with ticket sizes as low as €500,000, rising to a €4 million ceiling.
Having overshot its original €80 million fundraising target, the firm has anchored itself to what it views as fintech's natural evolution, where embedded takes the reins from Finleap and other outsourcing-based fintech technologies, the likes of payment processing company Stripe and others, to technologies that bring finance functions in house.
And that confidence spurs dealmaking activity anywhere that embedded finance could take roots. In automotive, for instance, where embedded/capital has backed a "modernising" product for carrying out digital automotive payments or credit lines (Bezhal/De.)
But the full scope for embedded finance spreads way further into a whole host of specialised B2B opportunities; building "fractionalised" finance products for second home purchases (Myne,) setting up payments for medical bills (Nelly) and allowing hospitality venues to join industry-wide consumer apps (Luca).
Before starting out, embedded/capital's team sought to double down on deal finding around four embedded finance themes: backing enterprise-grade services for SMEs that just work when they ask them too, revenue-driving models like buy-now-pay-later, better advice for embedded finance customers to access, and a digital backbone of assets and infrastructure to "replace inefficient tools."
For Motive, it's that proven talent and organisation in deal making thought that's exciting, with the added bonus of a formal presence in the hotbed for fintech innovation that is Berlin, giving the VC an enlarged trans-Atlantic presence.