Fintech focused investor QED will deploy $500 million in Indian startups

Mumbai: QED Investors will deploy up to $500 million in Indian startups over the next three years, Sandeep Patil, partner and head of Asia at the fintech-focused venture capital firm, told ET. The fintech focussed venture capital firm, which set up its India office last year, has already ploughed $150 million so far into the local market.

These investments are spread across neobank Jupiter, earned wage access provider Refyne, open finance firm Upswing, and fintech startup FPL Technologies, which operates digital credit score platform OneScore.

The VC firm has positioned itself as a multi-series investor to infuse capital across pre-seed, seed, series A, B and growth stage, he said.

It is ready to write cheques starting below $1 million and going up to $40-$50 million to back companies in the fintech sector, Patil added.

Being a fintech-focused investor, it will not ignore crypto investments, Patil said.

“We are focusing broadly on two buckets. First is what we call embedded finance, where financial services can be a source of economic advantage for companies. The second is new asset classes such as crypto,” Patil said, adding, “We are not first and forward… we are thoughtful, conservative, and a unit economics-driven investor.”

The firm, which has made a handful of investments in crypto globally, has backed Mudrex, a cryptocurrency company that specialises in autopilot smart crypto investment, in India.

“We are thinking deeply about it. Crypto is here to stay and the decentralised nature of the asset class makes it more resilient to volatility and local regulations,” Patil said.

Founded by Nigel Morris and Frank Rotman in 2007, QED started out as a family office but later transformed into a VC fund. Morris previously co-founded Capital One, one of the first fintech firms in the United States.

QED was initially funded through internal capital. In September 2021, it closed a $1.05 billion fund consisting of a $550 million Fund VII and a $500 million Growth Fund.

Globally, QED has invested in more than 175 companies across 14 countries. Most of its portfolio is based in the United States. Some of its biggest bets are Nubank, Remitly, SoFi and Klarna.

The firm has been increasing its pace of investment in India over the last 12 months.

“India is a growth hotspot. Once the liquidity situation settles down towards the second half of the year, I expect momentum to bounce back,” Patil said. “We are not looking at slowing down our pace of investment in India. Rolling the picture forward, we expect to invest up to $500 million in India over the next three years.”

QED will look to invest in lending companies, digital banks, SME lenders, the insurance space and wealth management and crypto companies.

The overall size of the Indian financial services sector has been estimated at $500 billion for 2021, of which the fintech market comprises $31 billion, according to a report by Blinc Insights.

Stay on top of technology and startup news that matters. Subscribe to our daily newsletter for the latest and must-read tech news, delivered straight to your inbox.