Mike McFadgen, Partner and Co-Founder of Element Ventures — The Nuances of Investing Across Europe

In today’s episode, Anirudh Singh sits down with Mike McFadgen of Element Ventures.

They Discuss:

Mike’s Background and Starting Element Ventures:
Mike started his career at Barclays Investment Bank while the team was building a principal investments business. During this time he got to see firsthand how banks engage with, invest in, and buy fintech startups and grew to appreciate the complexity of banking sales cycles. In particular, Mike worked closely with infrastructure and market structure companies, which has now become the backbone for many of Element Ventures’ investments. Mike went on to co-found Element Ventures in 2019 with Steve Gibson and Spencer Lake.

Differences Across European Regions:
Element Ventures focuses on B2B fintech investments, and aims to invest “at the earliest moment where the team feels there is repeatability in the business”. In particular, the team focuses on six verticals within fintech:

• SME Finance
• Capital Markets
• Asset Wealth Management
• Insurtech
• B2B Payments
• Defi

Unlike many other VCs in the space, Element does not shy away from “institutional fintech” — those that are selling to large banks and insurance companies. Instead, they find themselves sympathetic to the journey these startups are on and believe they have a right to win in the space given their past experiences.

Mike goes on to detail some of his experiences investing across Europe. He highlights how in some senses Europe is a very homogenous market — outside of Brexit the regulatory landscape is fairly consistent. However, cultural differences across Europe can make or break a young startup. He consistently finds himself asking how “portable” a company’s validation is from its home geography to other parts of Europe.

Investments Deep Dive:

• Coincover: Coincover offers a recovery and insurance product to consumers in crypto. When users sign up for a crypto wallet and store currency in that wallet, they are usually given a seed phrase for password recovery. Unfortunately, many users have lost this seed phrase in the past, and the fear of loss has become a barrier to adoption for new users. Coincover helps users recover their crypto even if they accidentally lose their private keys / seed phrase and moves the currency into another wallet. The team has also added an insurance product in case the user’s wallet gets hacked.
• Hepster: Hepster delivers product insurance as an API to eCommerce companies. The company is product agnostic, and can tailor its product to whatever its clients are selling. The team had an astounding 2020, driven partially by increased eCommerce spending during the pandemic. The company is based in Germany, where consumer demand for easy to procure insurance was on the rise, and has recently launched a pet insurance product.
• Axoni: Axoni was a portfolio company in Mike’s past fund. It’s founders were early believers in crypto, and quickly recognized the benefits of the underlying blockchain technology across other aspects of financial services. The team went on to build Axoni, which provides a “permissioned” blockchain in a private closed network to solve issues with data sharing. Recently, Blackrock joined Axoni’s equity swaps network.

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Mike McFadgen:

Mike is a Partner and co-founder of London-based B2B fintech venture capital firm Element Ventures. Mike made his first fintech investment in 2009 and since has had 12 years investing experience working with Barclays and Euclid Opportunities (the CVC fund of NEX Group). He currently represents Element on the boards of Hepster, Billhop, Minna Technologies and Coincover. He holds a Masters in Finance from London Business School and lives in London with his wife and two small children.

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About the Author
Anirudh Singh is a second-year MBA Candidate at The Wharton School, where he is part of the Wharton FinTech Podcast team. He has a passion for economic development, venture capital, financial services, and all things FinTech. Don’t hesitate to reach out with questions, comments, feedback, and opportunities at singhan@wharton.upenn.edu.