QED Investors was founded by Nigel Morris and Frank Rotman in 2007 and the firm is focused on investing in early-stage, disruptive financial services companies in the U.S., U.K., Latin America, Southeast Asia, and Africa. And QED Investors is dedicated to building great businesses and uses a unique, hands-on approach that utilizes the partners’ decades of entrepreneurial and operational experience, helping their companies achieve breakthrough growth. The firm’s notable investments include AvidXchange, Bitso, ClearScore, Current, Creditas, Credit Karma, GreenSky, Kavak, Klarna, Konfio, Loft, Mission Lane, Nubank, QuintoAndar, Remitly, and SoFi. Pulse 2.0 interviewed QED Investors co-founder, partner, and chief investment officer Frank Rotman to learn more.
“Prior to QED, I was one of the early architects who helped create Capital One and spent almost 13 years there in a variety of Executive roles,” said Rotman. “As the Chief Investment Officer I oversee all the investment decisions being made at the firm I also manage a portfolio of about a dozen companies that I lead for QED as an Investment Professional.”
Favorite Memory Working For QED
“It’s great building something again with Nigel Morris. We’ve worked together for 30 years and having a successful ‘Act II’ together has been very rewarding,” Rotman shared.
Challenges
Has the current macroeconomic climate affected your day-to-day? “Capital availability and the cost of capital has been impacted dramatically given today’s macro conditions,” Rotman acknowledged. “Most of our companies need access to downstream capital which means that in this environment there’s a lot more work to do to ensure that our companies have access to the resources they need.”
Research Report
BCG and QED Investors recently published the Global Fintech 2023: Reimagining the Future of Finance report. The report states that financial technology revenues are projected to grow sixfold from $245 billion to $1.5 trillion by 2030. And the fintech sector, which currently holds a 2% share of the $12.5 trillion in global financial services revenue, is estimated to grow up to 7%, of which banking fintechs are expected to constitute almost 25% of all banking valuations worldwide by 2030.
The report provides a comprehensive overview of fintech’s future landscape globally and explores the latest trends and opportunities in the global fintech market. And it also examines the regulatory environment for fintech companies and the impact of emerging technologies. Last year, fintechs on average lost more than half of their market value, but according to the research, this plunge was merely a short-term correction in an otherwise long-term positive trajectory.
Historically an underpenetrated market with nearly $4 trillion in financial services revenue pools, the Asia-Pacific (APAC) is expected to outpace the US and become the world’s top fintech market by 2030 with a projected compound annual growth rate (CAGR) of 27%. And this growth will be driven primarily by Emerging APAC (e.g. China, India, and Indonesia), as it has the largest fintechs, voluminous underbanked populations, a high number of SMBs, and a rising tech-savvy youth and middle class. North America, which currently has the world’s largest financial services industry, will remain a critical fintech market and innovation hub, projected to grow fourfold to $520 billion in 2030, with the US accounting for a projected 32% of global fintech revenue growth (a CAGR of 17%).
The UK and European Union combined are considered the world’s third-largest financial institution market and are expected to witness major fintech growth through 2030, estimated at more than fivefold over 2021 and led by the payments sector. Similarly, Latin American markets led by Brazil and Mexico, which have established fintech landscapes, are projected to show a revenue CAGR of 29% over the same time frame. The report projects a fintech revenue CAGR of 32% until 2030 in Africa, with South Africa, Nigeria, Egypt, and Kenya being the key markets.
The first part of the fintech journey was led by payments, which accounts for about 25% of cumulative equity funding ($120 billion) since 2000. And the sector will grow fivefold to $520 billion, driven by cross-border payments, payment-plus models (bill pay and payment apps offering adjacent services such as wallet services), and the proliferation of use cases driven by real-time payments according to the report.
With about 2.8 billion underbanked (50% of which reside in emerging economies) and an additional 1.5 billion unbanked (75% of which reside in emerging economies) adults in the world, neobanks will play a key role in expanding financial access.
“Fintech is a global phenomenon that will continue to produce generational companies. We’re still in the early chapters and all signs point to fintechs gaining market share over the next decade,” Rotman concluded.
