Private equity firm Motive Partners has agreed to buy German venture capital investor Embedded/capital to boost its early-stage investment capabilities in the fintech space.
Motive Partners, which has offices in New York City and London, will integrate Embedded/capital into its venture arm, which launched in 2021. The combined venture business will consist of 14 employees and have over $200 million in AUM.
PE firms have been increasing their participation in venture deals over the past few years as they seek to diversify their activities, although participation has slowed this year with the downturn. So far in 2022, PE firms have invested in 4,201 venture rounds worth a total $192.1 billion, according to PitchBook data.
“If you want to be the best investor you can be in a certain field, how can you not play at the earliest end of the spectrum, as well as at the later end?” Motive Partners managing director Sam Tidswell-Norrish said. “The ability to do early-stage investments gives us greater insights, knowledge, access and origination opportunities. There’s a ton of rational for investing in early stages and the most efficient way for us to do it was to acquire a firm we believe is a leader in the space.”
Other PE investors have also taken stakes in or acquired VC firms. Earlier this year, EQT bought European life sciences investor LSP.
Both Motive Partners and Embedded/capital are specialist investors in the financial technology space and together will cover early-stage, growth and buyouts.
The combined business will seek investments across Europe and North America. Both are well capitalized; Embedded/capital raised a €100 million fund in March, and Motive Partners closed a $2.5 billion fund in July.
Deal activity in the fintech sector has slowed this year for both VC and PE, as the market resets from record levels of investment in 2021.
But Embedded/capital co-founder and Motive partner Ramin Niroumand believes that the current environment offers more opportunities for specialist investors.
“I think [the current environment] is a benefit to us,” Niroumand said. “Valuations are coming down, FOMO is out of the market and not so core investors who jumped on the bandwagon in the last few years have left. We have recently raised funds and now is a good time to deploy capital for us.”
Featured image by Dilok Klaisataporn/Shutterstock
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