Finance Monthly - March 2022

s merchant bankers focused on Financial Services and impact investing, Middlemarch Partners believes that ESGfocused FinTechs have a unique ability to achieve rapid growth, deliver ESG-focused innovation, and attract investment capital to support their efforts to improve the environment and society while generating substantial returns. We believe that major financial institutions in their effort to adopt these ESG tenants will be compelled either to partner with these sustainable FinTech firms or to invest/acquire them to gain an upper hand with their industry peers. VC interest in ESG-related FinTechs has surged in the last twenty-four months. MasterCard issued a report which stated that venture funds deployed approximately 2.5 times more equity into ESG-related FinTechs in 2020 relative to what they invested in 2019 (from ~$0.7B to ~$1.8B). Middlemarch believes this trend will continue as earlier stage ESG FinTechs mature (and need growth equity) and more innovative FinTechs enter the market to address unmet ESG needs in the financial services industry. Rise of Climate FinTechs Climate action – addressing the damage done to the environment by human activities-- is perhaps the most talked about and researched topic among all the Sustainable Development Goals promoted by the United Nations and embraced by ESG investors and thought leaders. There is no surprise then, that Climate Tech was one of the fastest subsectors to emerge within FinTech. While there are many interesting segments in this space, we focus on banking and lending as well as payments, investing, Finance Monthly. F i nanc i a l Innov a t i on & F i nTech 55

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