H2 expands with Investec backing

02-Mar-2016

By James Dunn

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International banking group Investec Australia has announced an investment in fintech-focused venture capital fund H2 Ventures, enabling the group to expand its H2 Accelerator, Australia’s only fintech accelerator.

H2 Ventures, which was established by brothers Ben and Toby Heap in 2015, invests in early-stage fintech start-ups, supporting Australian entrepreneurs to build new ventures and working with institutional and sophisticated investors to fund promising early-stage companies in the sector.

While the size of the investment has not been disclosed, it was “significant”, H2 Ventures founding partner Ben Heap said.

“It gives us balance sheet [strength] and if things go to plan it will allow us to prime the pump as we also recycle capital and continue investing,” he said.

“We certainly expect the Investec investment to cover our next two to three funding rounds over the next 18 months or so.”

When it launched last year, H2 Ventures raised $10 million from high net worth investors, entrepreneurs and corporate venture capital funds to invest in 100 fintech start-ups over the next three to four years.

The intention was to invest $100,000 in each start-up, in return for 10 per cent of the equity, valuing each investment at $1 million.

The firm has made 15 investments so far.

Heap said the funding would help the H2 Accelerator “look at both different kinds of ventures and ventures at different stages”.

H2 recently launched the third round of its H2 Accelerator in Stone & Chalk, Sydney’s fintech hub, but Heap said the firm was looking to conduct rounds in Melbourne, Auckland and “further afield”.

In the current round, he said, the H2 Accelerator was looking at start-ups with a focus on lending, particularly peer-to-peer lending and crowdfunding, as well as those in the transactions, payments and wealth sectors.

“That’s where there is most activity – in the transactions/payments space, what is most exciting is blockchain technology,” he said.

“Insurance is also another very interesting fintech space globally, but to date we haven’t seen a lot of such plays locally.”

The momentum around fintech had increased on the back of recent government announcements in the space, he said.

“Australia actually has a competitive advantage in this space and it’s great that the government is on the front foot,” he said.

“It’s actually a good defensive strategy, because we can’t afford to be left behind in this rapidly growing sector of the global economy.”

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