Why Venture Capital Has The Hots For Financial Services
The Finance Technology 2.0 model is based on automation and technology rather than relying on people and manual processes.
Although there has always been investment into Financial Services at some level, the types of companies receiving funding has changed. Payment technology has always received a relatively healthy dose of VC investment and has many notable successes to point to as a result (e.g. Dwolla, Square). Now, though, we are starting to see investment into a much broader range of financial industries, including wealth management, capital markets, and insurance.
VCs have often been accused of demonstrating a herd mentality when it comes to investing in new sectors. Based on a thesis, one firm decides to invest in a sector. When one of their investments begins to gain traction, the sector slowly becomes "hot" with associates hunting for opportunities to put dollars to work. Although this herd mentality may be true, the Financial Services landscape is changing in a way that is making the industry much more VC-friendly. Read full story on Wall Street & Technology
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