ID Finance has joined forces with former Elbrus Capital fund manager Yuri Popov and asset management company Da Vinci Capital to launch FinTech Credit Fund, a $200m debt finance fund aimed at financial technology companies with a focus on alternative lending.
FinTech Credit Fund will offer debt finance to companies looking to scale and will cover loans to the companies themselves, as well as financing of their loan portfolios. The duration of the agreement will range from six months to three years.
“The vast majority of money going into fintech is chasing a small number of well-known startups. There are many more high quality fintech companies all over Europe, some of which are performing extremely well, that are seeking capital to scale,” comments Boris Batine, Co-Founder and CEO at ID Finance. “We see a huge opportunity to support these companies while providing a superior risk adjusted return to investors.”
The Fund will initially focus on projects within the CIS and European markets. Funding will be provided to companies involved in consumer and SME lending, and both balance sheet and marketplace (p2p) lenders will be eligible. Projects offering analytical solutions for credit scoring based on Big Data, AI and machine learning, as well as SaaS and PaaS solutions and payment services are of particular interest to the Fund and align with the investors’ areas of expertise.
Investment decisions will be made following assessment of a number of criteria including: a company’s creditworthiness, the strength of their business model and technology, the quality of their loan portfolios, and risk and revenue potential.
“ID Finance and Da Vinci Capital will provide a solid investment process and infrastructure for the Fund as well as access to our broad network of institutional and private investors. Our expertise in fintech and alternative lending at an international level will also help to reduce credit risks,’” added Oleg Zhelezko, Managing Partner, Da Vinci Capital.
“The lack of access to the capital market is a key factor hampering the growth of the financial industry. The access to capital markets is often open only to large companies. Similar problems are experienced by companies around the world. FinTech Credit Fund seeks to meet the need of fintech companies in the sources of constant capital for their further development,” said Yury Popov, Managing Director, FinTech Credit Fund.
ID Finance is one of the fastest growing and fastest moving online lenders globally. The balance sheet lender was founded in Russia in 2012 and has rapidly expanded into Kazakhstan, Georgia, Poland, Spain and Brazil.
“We see a huge opportunity to back the billion-dollar companies of tomorrow focused on digital lending,” continues Alexander Dunaev, Co-Founder, ID Finance.
About the global FinTech industry
The main drivers of the growth of the Fintech industry are the change in consumer preferences of the millennium generation, innovative technology and products, the development of market infrastructure, the increase in penetration and development of telecommunications services, the spread of APIs and the reduction in the cost of attracting users. The banking industry is at the greatest risk of change from the fintech companies. According to Accenture Banking 2020 report, by 2020, fintech companies will deprive banks of a third of revenue, and traditional banking services will become easily replaceable by the services of technology-oriented Internet-centric players. According to Preqin, funds attracted annually to direct lending funds for alternative lending industry, have increased tenfold over the last ten years to $ 21 billion in 2016.