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Alternative Market Briefing

Hedge funds are replacing venture capitalists in Silicon Valley

Thursday, April 07, 2016

Komfie Manalo, Opalesque Asia:

A new trend is emerging at Silicon Valley. Cash-rich hedge funds are replacing traditional venture firms by pouring billions into start-up technology companies, industry insiders noted.

A New York Times report noted that Chase Coleman’s Tiger Global has poured tens of millions of dollars into Brazilian startup digital finance company Nubank. Another hedge fund, Lee Ainslie’s $10.5bn Maverick Capital, is one of the three main investors in digital mobile marketing and commerce firm Vserv, which focuses in India and Southeast Asia.

Coatue Management is one of the investors of Lending Club, an online marketplace that matches borrowers and lenders, the report added.

Data from PricewaterhouseCoopers showed that hedge funds and other investment firms have poured in an estimated $12.2bn in financial technology or fintech last year, more than double the amount of $5.6bn invested in fintech in 2014.

Fiona Grandi, a financial services fintech leader at KPMG, commented, "There was a huge wave in 2013 of hedge funds and other alternative investment firms shifting into the fintech space." It was noted that most bank across the globe have reduced their lending and other services after the 2008 financial crisis.

The gap allowed other players to step in and provide those services through the internet and as smartpho......................

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