The virtual platform for investments in private equity funds plans to use the money to expand abroad. Moonfare also wants to further lower the entry barrier for private investors.
Vitruvian's entry shows once again that Anglo-Saxon financial investors like to deal with German addresses.
Frankfurt The German fintech Moonfare receives another financial injection for the expansion of the business model. London-based private equity firm Vitruvian Partners is providing $35 million for the private equity platform. “With the new financing, we will advance the internationalization of the business model. For example, we will soon be opening an office in Singapore,” says Steffen Pauls, founder and CEO of Moonfare, in an interview with Handelsblatt.
The company enables private investors to gain digital access to private equity funds, venture capital funds and infrastructure funds. Private equity is the collective term for company investments. The special funds acquire minority or majority shares. The companies in the investment portfolio are restructured over several years and then resold to an industrial address or listed on the stock exchange.
Normally, only institutional investors with several million euros can invest in private equity funds such as KKR or EQT. With Moonfare, private investors are already involved with smaller amounts, whereby the minimum investment is to be further reduced.
“We want to significantly lower the entry threshold. The minimum investment is currently 200,000 euros, which should drop to 10,000 euros. We expect concrete products for the retail business in the fourth quarter of 2022,” says Pauls.
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Vitruvian's funding follows a major $125 million funding round with Insight Partners. According to industry observers, the fintech is now valued at between $600 million and $700 million. The founders and management remain involved with a good 40 percent of the shares. "A quick exit is out of the question, we want to push the 'democratization of private equity'," adds Pauls.
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The war in Ukraine did not noticeably affect the demand for private equity. Many clients wanted to protect their money from inflation, which is an important reason for investing in private equity. Returns on private equity investments are often in the double digits, but the capital usually remains tied up for around ten years. The higher return is therefore also seen as a premium for illiquidity.
Moonfare currently manages around 1.6 billion euros, and according to its own statements, the growth rate on an annual basis was 150 percent. Vitruvian is investing from a four billion euro fund, with previous investments including Just Eat, Farfetch, Transferwise and Trustpilot.
Vitruvian's entry shows once again that Anglo-Saxon financial investors like to deal with German addresses. “The interest in German start-ups is huge – especially abroad. And it is primarily foreign strategic investors, i.e. companies that buy young German companies in order to expand their own product portfolio," says Thomas Prüver, partner at the management consultancy EY (Ernst & Young).
North American groups in particular were already interested in German start-ups last year: According to EY, 52 German start-ups were taken over by US companies – 38 more than in the previous year.
More: How the Ukraine war is affecting the private equity industry