"Simply put, it’s a good time to be an entrepreneur (as well as a venture investor looking to back the best teams with the best ideas)." -- MiddleGame's Pascal Bouvier, Michael Meyer and Patrick Pinschmidt
The above passage reads from a blog post by the founders of MiddleGame Ventures and adequately captures the firm's optimism when it comes to supporting companies changing the game in financial services.
Founded by Pascal Bouvier, Michael Meyer and Patrick Pinschmidt, MiddleGame describes itself as a "fintech fund for the next decade". The firm invests exclusively in fintech companies from late seed to Series B. MiddleGame understands fintech not simply as a "banking phenomenon", but as a "meta universe" of opportunities across payments, lending, capital markets, asset management and insurance. This integrated and ecosystem-level approach to financial services defines the fund's entire investment strategy.
While MiddleGame was only founded in late 2017, the team behind it are longtime veterans of the finance, venture capital and regulatory industries on both sides of the Atlantic. MiddleGame's partners have collectively invested approximately $300 million in fintech companies over the past decade. Managing partners Pascal Bouvier and Michael Meyer have led venture investments at firms including Santander InnoVentures and Route 66 Ventures, and General Partner Patrick Pinschmidt formerly served as a Deputy Assistant Secretary at the U.S. Treasury Department. In addition to the venture fund, MiddleGame also powers NadiFin, a FinTech accelerator programme for early-stage startups. The NadiFin programme takes place in both Dublin and Luxembourg, each year.
MiddleGame is headquartered in Luxembourg with offices in Dublin and Washington DC. I connected with the MiddleGame team to learn more about their investment approach and why Fintech is the most exciting space to invest in right now.
Thanks so much for taking Tech.eu's Reverse Pitch! First, can you summarize your investment thesis in three sentences:
MGV is an early stage venture capital firm focused exclusively on FinTech in Europe and North America. We believe the next wave of FinTech is a fundamental renovation of financial services architecture. Consequently, we are looking to partner with great teams who are focused on middle and back office solutions using advanced technologies.
What industries and business models are you most interested in investing in?
FinTech is all that we do. Our investments range across five key sectors: banking, asset management, insurance, payments, and capital markets, including associated areas such as RegTech and digital identities. B2B and B2B2C models are the focus. B2C was successful in the first wave of FinTech but is very difficult for venture capital given the high failure rate and the high cost to acquire retail customers.
Which technologies do you find most exciting right now, and why?
We believe the “fin” is more important than the “tech” in financial services. The problem a startup is attempting to solve is far more important on whether they are using Ai, big data, or crypto. But, to answer your question, big data analytics and the application of crypto technologies are attracting huge talent, with the technology offering interesting solutions for a re-architected financial landscape.
How much do you typically invest?
We target Seed through Series B and prefer to be the lead investor. As such, the investment amounts will range from €500,000 to €5,000,000 for the initial investment with capital reserved for follow-on participation.
Beyond funding, where does MGV provide the most “value-add” for founders?
We bring to bear an essential - and differentiated - mix of investment, operations, and regulatory expertise to our investment process and on behalf of our portfolio companies post-investment.
- First, Pascal and Michael were both former operators and therefore understand how difficult it is to grow and scale a business and thus can offer differentiated operating and strategic counsel to startups.
- This is supplemented by Patrick's experience as a former official at the U.S. Treasury Department and prior career at Morgan Stanley and Merrill Lynch.
- Thus, the team’s experience -- in the context of our combined network on both continents -- allows us to play a hands-on role in helping startups navigate operational and strategic challenges, as well as engaging with regulators and financial services incumbents. These are the critical challenges confronting fintech entrepreneurs.
Do you have any geographic restrictions on investments?
We currently invest only in Europe and North America. Within those markets, we follow the talent. Germany, France, Central Europe, Luxembourg and Ireland are particularly interesting today.
What is your commitment to diversity and inclusion?
A big focus for us. We plan to double our team over the next year and are actively targeting diverse candidates for these new roles.
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What’s one investment from your Anti Portfolio that you wish you hadn’t passed up:
This is a long list! N26 and Monzo probably hurt the most. GREAT teams and exciting growth. We were not too smart on those...
If you could invest in any type of business or technology right now (real or imagined) what would that be?
Capital markets infrastructure startup using crypto, big data, and STP to eliminate massive waste and inefficiencies of incumbent processes.
What is the best way for founders to get in touch?
Email through our website is most common but we are inundated for sure. Warm introductions are always best! We are also hosting the second edition of our two-week VC-led accelerator in Europe this spring, called NadiFin. This is a great way for startups to get to know us (and vice versa). Interested companies should apply at www.nadifin.com.