Yo Sifted Reader,

We’re back with another fintech blast.

Last week we asked what you wanted more of, and you told us “VC VC VC”.

Well, you ask, and we deliver. This week, we’re discussing:

• Index Ventures' fintech strategy
• (Transfer)Wise’s fraud allegations
• Neobrokers’ shiny new social tools
• A very spicy 'DM to the Editors'

We’re already a party of over 3k fintech nerds (!) and we’re thrilled to be your DJs.

Please keep sending us your requests and we’ll keep bringing the fintech soundtrack.

If you’re joining for the first time, welcome and sign up here to get us in your inbox every week. 

Keep jamming!

What's Hot... 👍

🚀 SPAC to the future. After years of speculation over an IPO, investment platform eToro has ended up going public through a merger with a blank check company. The move gives eToro a $10.4bn valuation — twice the price that was reportedly being eyed for a Nasdaq listing in December.

💸 Billionaire backing. Recent filings have revealed billionaire fund manager Alan Howard is a major backer of CoinShares, Europe’s biggest crypto asset manager. The company recently went public through a listing on Sweden’s Nasdaq First North Growth Market.

🤑 Raking it in. UK digital lender OakNorth saw profits surge to £77.6m during 2020, despite the pandemic. The FT recently revealed that OakNorth had been hit with some £100m in defaults, but the challenger’s annual report may lay to rest some concerns over the loanbook.

... And What's Not 👎

😖 What a MS. Wise (formerly TransferWise) has been accused of fraud by its former Brazilian banking partner MS Bank. The episode follows Wise getting its own FX broker licence from Brazilian regulators in January, which prompted a split (and what Wise calls "a smear campaign"). Eyes now on the central bank to see if it investigates.

💰 Powa play. You may remember Dan Wagner — a flamboyant character whose unicorn startup Powa Technologies collapsed in 2016 after burning through hundreds of millions of pounds in debt and equity funding. Now, Wagner is back, raising yet more millions for his latest ecommerce venture, securing backing from the UK’s Future Fund.

🏦 Neobank market share. Monzo CEO TS Anil has adopted a punishing work schedule to drive it forwards, but Monzo will need to watch its back. The neobank is still the UK’s frontrunner, but one study showed rivals Starling Bank, Curve, and Revolut taking market share last year.

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\The Two Cents

Index Ventures and their fintech fantasies

If anyone knows what’s hot in European fintech, it’s Index Ventures.

Index is one of the most active VCs in European fintech, investing early and riding the wave. To date they’ve raised $9bn and have backed 11 fintech unicorns globally.

But Index’s European fintech investments are maturing, with several big exits already banked. That means it now needs to find its next crop of winners.

I sat down with Partners Jan Hammer and Mark Goldberg to hear about their fintech strategy and what’s next. (The full interview can be read here, by premium members)

For context, it was one of the most refreshing chats I’ve had in a while. Their answers were peppered with logic and relatively free of hype, which allowed for a good tête-à-tête.

We discussed Index’s shift towards B2B, the power of fintechs’ brand, the valuation threat facing Buy Now Pay Later (BNPL), and “headless payments” (Don’t worry, we found out what that means).

Just for you, we’ve also included a little sneak peek below.

The Index fintech landscape 

First, here’s a little reminder of what Index’s fintech portfolio looks like today.

Aside from unicorns like Revolut, Index’s next crop of rising stars include Taxfix, Auxmoney, Codat and Alan. 

The analysis below also shows Index has been more active in France’s fintech scene than anywhere else in Europe in the last 2 years.

What’s next 

So far, Index hasn’t yet announced any European fintech investments this year. So where have they been focusing their attention? 

“We spend a lot of time thinking about who the AWS of fintech will be,” Goldberg told Sifted. “I feel so bad for companies that say they spend four years building the infrastructure to launch... If you’d started three months ago, you might be in the same place.”

In this vein, Index’s Hammer says he now spends more time on B2B than consumer fintech. “[With infrastructure], you don’t need to pick the winner, you need to get the trend right,” Goldberg explains, having already backed Plaid and Codat. 

Index haven’t forgotten about consumer finance, however. The two partners are currently buzzing about the consumer payments space, including the evolution of ‘click and pay’ links and improvements to group payments

Any excitement around blockchain-based payments, like DeFi [Decentralised Finance]?

“What’s DeFi”? Hammer asks.

Well, perhaps not yet then.

— Isabel

\Neobrokers

The next big thing for fintech trading apps: social networks

In the wake of the GameStop fiasco, neobrokers on both sides of the Atlantic have rushed to clarify how their take on retail trading differs from the model pioneered by Robinhood.

VCs are betting that investment apps can turn the rise of communities of 'casual investors' to their advantage — but Europe’s crop of neobrokers has been slower to react than their counterparts in the US. 

Can the likes of Trading212 and Nextmarkets catch up? 

Ryan Weeks reports.

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