Europe has emerged as a key region for hatching and scaling fintech companies. And today, one of the more prominent fintech startups is announcing a large round of funding, from a mix of strategic investors, to keep growing its business.
Dublin-based Fenergo builds solutions for banks and other financial management companies to help with regulatory compliance, customer onboarding and other "lifecycle management" requirements. It has raised $80 million in funding at a post-money valuation of around $800 million, one of the bigger rounds for an Irish fintech company to date. (I'm not counting Stripe, which was founded by Irish brothers but is based out of San Francisco.)
The funding is coming from two investors: the multinational banking giant ABN AMRO (via its Ventures arm) and DXC Technology, which provides a wide range of IT, systems integration and consulting services to businesses (and thus a key partner for a company like Fenergo). The pair has taken a 10 percent stake in the company.
It will be used to continue building more products and for acquisitions—a notable point as we are in the middle of a strong period of consolidation in the world of fintech. With this round, Fenergo has raised around $155 million to date, with previous backers including strategics like BNP Paribas, Investec, Ergo and Insight Partners.
“ABN AMRO and DXC Technology’s investment and partnership with Fenergo is testament to the credibility of both firms. They will be joining the ranks of BNP Paribas, Insight Venture Partners and our other equity holders,” said Spencer Lake, vice chairman of Fenergo, in a statement. “We look forward to further accelerating digital transformation, enabling better client experiences and delivering even greater value to our shared customers going forward.”
While banks might, in some regards, look a lot like tech companies -- and for that reason, in places like London, there has long been a push and pull between tech and finance when it comes to recruiting top tech talent -- there is a case to be made for startups that are built around the idea of hatching and developing interesting technology for the banking sector, while at the same time not competing against it directly. That is one reason why Fenergo has so many strategic investors.
"Ultimately, we only exist to serve the needs of our customers," said Marc Murphy, Fenergo's founder and CEO, in a statement. "Their pedigrees, deep experience and industry knowledge make them both ideal investment partners for Fenergo. ABN ARMO joins BNP Paribas on our list of clients that are also investors. Our goal is to ensure they can digitally transform, be regulatory assured and able to deliver award-winning customer experiences.”
So while you might think of Fenergo as sitting in the same "fintech" category as Transferwise, Starling and the many other startups building services that are disrupting and stealing away customers from traditional financial services providers, it's more of a financially-focused enterprise services business, giving bigger banks the tools to help compete and generally run their businesses better.
"This investment will contribute to ABN AMRO’s strategic priority to build a future proof bank and fight financial crime. We are impressed with the management team and solution Fenergo offers," Hugo Bongers, Director, ABN AMRO Ventures, said. "In addition, this gives us additional exposure to a group of tier one investors.”
Fenergo's services speak to a lot of the headaches that banks have to deal with in the new era of digital banking. That includes a host of regulatory requirements; client lifecycle management (onboarding and making digital interfaces usable); and rolling out digital interfaces for the services that banks typically offer (corporate/institutional banking, asset management, private banking and wealth management); as well as client and regulatory technology for financial services. Fenergo also, critically, covers internal-facing services, too, so that the data gleaned from the client-facing products can more easily parsed.
The company today has 70 customers on its books, which may not sound like a lot until you consider that the customers are leviathans like ANZ, PNC, Banc of California, National Australia Bank, Canadian Imperial Bank of Commerce, UBS Asset Management, Anglo Gulf Trading Bank, Royal Bank of Canada, First Abu Dhabi Bank, Tricor, Exos Financial and Mizuho, in addition to the two strategics announced today. ABN AMRO alone has nearly €200 billion in assets under management, so providing services for this small but at the same time huge list has proven to be a lucrative route for Fenergo, which has had growth of 21 percent in its revenues this year.
The growth of the company is also coming at a notable time for financial technology startups in Europe.
London has traditionally been seen as one of the world's financial centers, a focus specifically around its position in investment banking. But with the UK's departure from the European Union, some believe that position could be up for grabs, or at least disrupted a little more. Departures of ventures like N26 from the U.K. market would seem to underscore that idea. However, I'd argue that you have to look at any actual underlying business before jumping to any conclusions. If a company is thriving, would it leave, for example? Or is the implication here that the prospects for thriving have now been cut?
In any case, Dublin has, for the last several years, emerged as a very critical hub for a number of technology and other businesses. They have turned to the city to base their international HQs, to tap into its lower cost of living, English-language lingua franca, ability to attract talent, and sympathetic tax policies. Fenergo's positioning in the city and its growth are a testament to that continuing trend as it plays out in the worlds of enterprise and fintech services.