Finstar Financial Group, a global private investment group, has set up a venture-capital arm and hired a former Wonga executive to make investments in financial technologies that can support its portfolio companies.
The $2 billion financial services-focused firm has launched FinstarLabs, which will be led by Mark Ruddock, a former managing director at Wonga, who headed up international operations at the payday lending business.
The firm will back early- or later-stage fintech companies focused on technologies such as data science and mobile computing, Mr. Ruddock said.
FinstarLabs will open an innovation lab—or incubator—in Berlin early next year, because that is where many of the financial technology startups are based, he said.
FinstarLabs has an undisclosed amount of capital from Finstar Financial Group and isn’t currently looking to raise third party capital from investors, Mr. Ruddock said.
The firm declined to disclose the exact amount it will invest in fintech startups, but a spokeswoman said it is planning to commit “several millions.”
“The idea is to identify smart, young entrepreneurs that are working in the areas that we are focusing on and accelerate their companies,” Mr. Ruddock said.
The new venture-capital arm will provide Finstar with access to fintech innovations that can help its own assets grow, the firm said. The firm is on the verge of completing an undisclosed number of investments, Mr.Ruddock said.
FinstarLab hasn’t set a specific return target for its investments, according to Mr. Ruddock. He added: “[The benefit] could be the impact on our internal businesses, as opposed to a traditional venture return, which might be through an exit or IPO.”
FinstarLab will be able to “create brand new businesses” that can “generate tremendous returns” or that will be “valuable in driving additional value creation to our existing portfolio companies,” he said.
