FinTech-focused venture capital firm QED Investors has closed two funds worth $925 million.
The funds, announced Tuesday (May 23), consist of an early stage fund worth $650 million and a $275 million early growth-stage fund. This brings the total funds under management by QED to more than $4 billion.
“We are excited, fortunate and privileged to be a steward of our investors’ capital,” QED Co-founder and Managing Partner Nigel Morris, said in a news release. “We don’t take that responsibility lightly, especially in this difficult market.”
Morris added, “Growth at all costs will not win the day in this business cycle. Unit economics, product-market fit and clear paths to profitability are the keys to survival, and QED is uniquely positioned to support our companies with the best advice in fintech.”
As PYMNTS has noted before, the “growth at all costs” mindset Morris mentions has fallen out of favor in some parts of the VC world recently as the funding environment has grown tougher.
“There’s a major focus on profitable growth which wasn’t the case in 2021,” Thomas Cuvelier, partner at Paris-based venture investment firm Alven, said in an interview with PYMNTS late last year. “Now we look at unit economics much more carefully than before.”
Meanwhile, last month saw reports that experts worry startups are in danger of running out of cash as the market downturn goes on, with some venture-backed companies forced to raise money at reduced valuations.
“We haven’t had a compression in values like this in more than 20 years,” Cameron Lester, global co-head of technology media and telecom investment banking at financial services firm Jefferies, told Bloomberg News in April. “It’s an absolute bloodbath.”
That report, citing data from Pitchbook, found that more than 400 companies haven’t raised new money in two years, while 94% of tech unicorns — startups valued at least $1 billion — were unprofitable.
“Some of these companies remind me of Scottish nobility that haven’t raised money in seven generations,” said Mathias Schilling, co-founder of venture firm Headline. “They sit and drink champagne while it rains through the roof.”
In an interview with Bloomberg News Tuesday, Morris acknowledged that it’s been difficult seeing FinTech valuations implode.
“The market is really different to how it was two years ago,” he said, but added that he believes the larger economy is stabilizing.
“We’ve reached a nadir in terms of valuations,” he said.
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