Exclusive: New £30m fintech venture fund nears close

The fund will invest in early-stage fintech firms globally, with a particular focus on B2B technologies.

A new name has arisen within London’s fintech-focused venture capital scene.

Assembly Capital Partners is closing in on a £30m raise to invest in fintech firms globally, with a focus on B2B technologies and a particular love for insurtech.

The fund’s founders are former investment bankers Michael Baptista (pictured) and David Shannon. Baptista has 25 years in investment banking behind him, having worked as head of research at CreditSuisse, ABN AMRO and UniCredit. Shannon, again with 25 years in banking to his name, was formerly head of market risk at Barclays Capital.

Baptista left UniCredit in 2015 to set himself up as an angel investor in fintech, laying the groundwork for the launch of Assembly Capital Partners.

“I thought that venture capital as it was being done, as it is being done, was a mixed bag,” said Baptista, in an exclusive interview with AltFi.

He described a gap in the market for venture investors with ‘deep domain knowledge’ who could work constructively with founders, while at the same time prioritising returns after fees for investors.

By late 2017, Baptista had offers from a number of would-be LPs to anchor a new fund and he has now accepted one of those offers. Though he wouldn't name the investor, he told us it’s the family office of a very high net worth individual.

The fund is not yet closed, but Baptista says that a substantial amount of the £30m target has been raised and that the anchor investor is not the only LP involved. “The fundraising is ongoing, but the demand is quite strong,” he said.

Assembly will write cheques ranging from £250k to £3.5mn, with an average ticket size of £750,000 to date. Its focus is on fintech globally, with a proclivity for B2B specialists. Pressed on its preferences, Baptista said that insurtech is among the fund’s favoured sectors.

“We love insurtech because the scale of the industry and the rather challenging state of its IT means there’s enormous scope for innovators either to challenge or more interestingly to work with incumbents to improve efficiency and the product range and pricing of insurance companies,” he said.

Assembly has already invested in four companies, three of which Baptista backed as an angel investor. Those firms are loan analytics firm AltFi Data, buy-to-let mortgage lender Landbay and P2P payments solution PayKii. Its fourth portfolio company is a regtech start-up named AuditXprt.

“Before year-end we hope to close two more investments, one of which we invested in as an angel investor and one of which we didn’t,” said Baptista. He emphasised the pace of investment; Assembly could rack up six investments by year-end, having started investing as recently as September.

Data-plays are another point of emphasis for the new fund. More broadly, it will target fintech firms with a high degree of specialisation with the potential to inherit work from larger financial institutions through partnerships – work that those larger firms either can’t or won’t do.

Baptista highlighted Landbay as one such specialist: “In the case of Landbay, we would expect that over time, some of the banks would outsource some of their origination in that specialist field [buy-to-let mortgages] to Landbay.”

Assembly has been set up such that its founders are aligned with their investors, meaning Baptista and Shannon will only make ‘significant money’ from returns, rather than on fees. If that investment philosophy pans out, Baptista hopes to go on to raise a number of funds, while always maintaining a focus on early-stage fintech ventures and working closely with entrepreneurs.