QED Investors today announced the closing of two new funds totaling $925 million, capital that it will be using to back early-stage financial technology startups, as well as growth rounds for later stage companies.
Specifically, today QED is announcing an “oversubscribed” $650 million early-stage fund – its eighth – and a $275 million growth-stage fund (the second of its kind), both of which are aimed at backing fintech companies primarily in the U.S., the United Kingdom and Europe, Latin America, Africa and Southeast Asia.
Since its 2007 founding by Nigel Morris — who also co-founded Capital One Financial Services in 1994 — and Frank Rotman, QED has backed more than 200 companies, including 28 unicorns. With the two new funds, QED says it will have more than $4 billion under management. When it raised $1.05 billion in September 2021, the firm had over $3 billion under management. While the firm would not name its LPs, Morris said they included both returning and new ones.
Alexandria, Virginia-based QED was investing in fintech before fintech essentially exploded in 2020 and 2021, largely fueled by the COVID-19 pandemic and its resulting push to more financial transactions being conducted digitally. For example, the firm led the Series A rounds of Credit Karma, Remitly and Nubank, led AvidXchange’s Series B and participated in Klarna’s Series F.
Global fintech funding amounted to $75.2 billion in 2022, down 46% compared with 2021, but up 52% compared to 2020, according to CB Insights. Despite the recent slowdown in fintech funding, Morris believes that QED’s having invested exclusively in the space for 16 years experience gives it an advantage.
In a written statement, he said: “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.”
The firm has been vocal about is interest in emerging markets such as Latin America and Africa.