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April 5, 2024

April 2024 newsletter: Optimism in Q2, Opportunities in MENA and European Rates

April 2024 QED Investors newsletter

Welcome to Q2: "We're in the pipe, five by five"

No matter how busy life gets, finding time for the QED team to get together each quarter is always a priority for me. The cherry blossom trees were in peak bloom, which I think was quite fitting as we discussed entering a time of renewed hope after a fickle winter.

As I pondered a theme for the first quarterly business review of the year, I found inspiration in the optimism the cherry blossoms bring to our great capital. So, for our theme heading into Q2, I landed on "we're in the pipe, five by five," and moving forward from there.

For those who might not be familiar with the saying, it's from the great James Cameron 1986 science fiction film "Aliens." It's an aviator term and means, "I hear you loud and clear, and I can see where we're going."

As the trees turn over a new leaf, we're confident that the markets will follow. The U.S. economy is very solid, with Reuters reporting that the fourth-quarter GDP growth revised up to a 3.4% rate, consumer spending and business investment revised higher and weekly jobless claims fell 2,000 to 210,000, with the current unemployment rate sitting at 3.9%.

I'm feeling quite positive about the road ahead. I have a continued sense of optimism for the future of fintech. It’s not just in the U.S. where fintech will continue to thrive – Asia will rival the U.S. by the end of the decade, African fintechs will rapidly leapfrog the incumbents and supportive regulatory climates will power growth and kickstart adoption across Europe, India and key regions of LatAm.

I expect that we'll see a number of fintechs that have the size, product-market fit, revenue profit and growth go public in the coming quarters, including the Klarnas, Stripes, Plaids and Monzos of the world, plus a continued appetite for M&A opportunities, particularly among those that are short on runway.

This year is already off to a lively start for the fintech sector, and I can see a blossoming road ahead. A few bright spots in the public market come from our very own portfolio companies. Worth noting that Nubank reported a $1 billion net profit in 2023, Remitly reported that it saw a 44% increase in revenue in 2023, SoFi made its first-ever profit and beat estimates, and AvidXchange and Flywire revenues were up 20.8% and 37.6%, respectively, in Q4 2023 compared to Q4 2022.

Perhaps the biggest M&A that we will see this year was announced last month, as Capital One agreed to buy Discover Financial Services for more than $35 billion. Rich and I were always inspired by the operation Discover was building, with its payment network alongside the card issuance business that allowed it to become a dominant player in the space. This deal, pending regulatory approval, has the power to transform an idea that started in 1988 into a company that is No. 1 in the world.

As I reflect on the activity we’ve already seen in a mere three months, the opportunities that lie ahead are clear.

Here's to a new quarter and a new season. "In the pipe, five by five."

Be well,

What the QED Investors team is talking about

Searching for the holy grail of employer-sponsored benefits startups

The start of Individual Coverage Health Reimbursement Arrangements (ICHRA) marks a significant evolution in the domain of employer-sponsored health benefits, introducing flexibility, personalization and a host of strategic opportunities for startups.

The introduction of ICHRA is effectively aiming to allow employers to use pretax dollars to subsidize employee premiums for individual health insurance, including plans on the ACA public exchanges.

Expected to particularly benefit small employers by offering another option for financing worker health insurance coverage, ICHRA was designed to increase employer flexibility and employee choice. The rule anticipated that around 800,000 employers would offer ICHRAs, covering more than 11 million employees and their family members. This arrangement provided a way for employers to control costs while offering employees a wider range of personalized health insurance options, underlining the move towards more flexible, tailored healthcare benefits.

As of late 2023, around 3 million Americans are enrolled in ICHRA. According to the HRA Council, adoption of ICHRAs has more than tripled since they were introduced in 2020. As many as 89 percent of benefits decision-makers, who don't currently offer them, are considering ICHRAs for their employees over the next three years.

Having invested in a number of health and benefits startups (shoutout to my partner Laura Bock in leading our investments in Decent, Easy Health and Finch), we at QED are very excited about what’s to come, and wanted to share some of our learning and notes from our research.

If you are building in this space, we are excited to hear from you - please reach out. Connect with me on LinkedIn here or email me here.

Read the full blog post on our website.

- Victoria Zuo, Principal

Time to shine? Fintech's opportunity in MENA

The Middle East and Northern Africa (MENA) region is ripe and flourishing.

That’s the biggest single takeaway I have after spending a week in Riyadh, Abu Dhabi and Dubai with QED's fintech stalwarts Nigel Morris, Bill Cilluffo and Chuckie Reddy.

During our visit, we co-hosted a breakfast with UK/Saudi VC 9900 Capital, an afternoon tea with Saudi home-grown fund Outliers VC and an industry networking event with our friends at VentureSouq. I also attended an investor dinner organized by Saudi fund of funds SVC and got an opportunity to meet the Saudi Government Minister for Communication and Information Technology.

In addition, we met many companies including payments and procurement SaaS Pluto, payments fintech Pemo, SME neobank Ziina, SME payments business Mamopay and BaaS provider Nymcard. Of course, there were plenty more that we didn’t meet this time that we look forward to getting to spend some time with as we get more acquainted with the region.

There is a massive opportunity here. The opportunity and excitement is palpable and it felt as if this region was on a different time schedule to the rest of the world. There’s real GDP growth, very high (and growing) GDP per capita, an abundant supply of downstream capital and a flourishing early VC ecosystem.

The ‘fintech gap’ – the lack of digital-first financial products enabled by technology – also exists, and we heard similar messages about incumbents’ reluctance to innovate because of few competitors compelling them to raise the bar as we have in many other geographies across the world.

Fintech funding represented $1.4 billion in MENA in 2023. Since 2021, there have been twice as many fintech deals closed compared with the next most popular sector, e-commerce.

Read the full blog post on our website.

- Gbenga Ajayi, Partner, Head of Africa

Navigating the IPO Terrain

In recent times, India’s stock market has surged to prominence, marking a notable ascension among the world's largest exchanges. This comes at a juncture when the private market begins to awaken from its prolonged slumber, heralding a period replete with both challenges and opportunities for start-up founders considering going public. Let’s unpack the implications of these developments to help founders make informed decisions on going public.

The Competitive Edge of Indian Markets

The allure of the Indian stock market has intensified, attributed to a substantial increase in total market capitalization, placing it prominently on the global stage. The Indian stock market surpassed a $4.5 trillion market capitalization in January 2024 making them the next biggest behind those of the US, China and Japan.

This rise is underscored by compelling total shareholder returns and a distinct quality of liquidity attributed to domestic investors' significant contributions in recent years. Domestic investors have a deeper appreciation of and commitment to India's economic, regulatory, and financial fabric, and offer a stable foundation for the equity markets. However, as the retail investor base expands welcoming many first-time market participants, a degree of volatility and unpredictability could ensue, the full extent of which remains to be seen.

Current multiples in the Indian market are higher. A positive long-term outlook for the Indian economy and companies supports higher multiples. This optimism is based on anticipated robust GDP growth and consumption, suggesting that Indian companies will likely deliver superior long-term growth. This scenario of higher "terminal value" justifies the higher multiples. In addition, supply-demand dynamics also drive up prices of stocks. The scarcity of high-quality stocks relative to the influx of new investors could be pushing prices upwards.

Thus, the Indian stock markets present a uniquely compelling proposition for start-ups contemplating a public listing. The presence of a large domestic investor base, well-versed in the intricacies of the local economy and regulatory landscape, promises a pool of committed long-term shareholders.

Read the full post on VCCIRCLE.

- Sandeep Patil, Partner, Head of Asia

European Rates: Spring is in the Air

Even though investors had not so secretly been wishing that the European Central Bank (ECB) would announce a rate cut during its March 7th meeting, prevailing expectations were validated when ECB president Christine Lagarde announced rates would remain flat at 4 percent.

Nonetheless, markets are currently expecting a rate cut as early as June 2024, especially as French and Italian inflation data came in better than expected at the end of March, with the French read coming in at its lowest level since July 2021.

In other words, while we are still not fully embracing the warmth of summer, one could say that welcomed rays of sun are giving us hope that spring is in the air. So what does this mean for entrepreneurs and investors?

Well, first and foremost, it is worth starting with a couple of words of caution. While the overall expectation is for rates to decrease in June and beyond, that is based on the prevailing conditions in the world today, and unexpected macro shocks, further shipping disruptions, or oil price hikes can result in higher inflation and subsequently alter central bank behaviour.  To paraphrase Thomas Jefferson, the price of free markets is eternal vigilance.

Secondly, even though rates are likely to come down in the coming months, the days of the ZIRP (Zero Interest Rate Policy) are unlikely to return anytime soon. Said another way, both investors and entrepreneurs need to internalize that risk-free rates, and hence return hurdles for capital, will be a good measure above the historic lows we had witnessed during 2021 and 2022.

As we had mentioned in a previous article, when rates are zero, a 2x nominal return over 10 years is also a 2x real return, but with 5% risk-free rates, a 2x nominal return over the same time horizon becomes a 1x real return – in other words, a zero IRR in real terms. With higher rates in fixed-income markets thus comes a need for entrepreneurs and investors alike to increase their nominal return hurdles. Discipline around keeping costs in check, paybacks short, and treating capital as the precious commodity that it is, are all good habits that must continue to be cultivated.

A third factor to be aware of is that while rates may well be headed down in the near future, the compounding impact of having had higher rates for much of 2023 will still result in spring tempests in many corners of the Eurozone and beyond. We may be almost a year past the rate-induced SVB collapse that shook both sides of the Atlantic, but the cumulative effect of high rates will yet exact a toll. As an example, German GDP is now confirmed to have shrunk in Q4, putting the largest European economy on the brink of a recession, while businesses “on the edge of collapse” in the UK have increased by 25 percent in Q1 according to MoneyWeek data, leading them to call 2024 the year of the bankruptcy. So don’t unfasten your seatbelts quite yet.

On a more positive note, and looking further ahead, we should also remember that much like nature, the economy moves in cycles, and when thinking about up and down movements in macro conditions or interest rates, it is better to think of oscillating sine curves as opposed to unidirectional arrows that either point up towards infinity or into the depths of despair.

The true test for entrepreneurs and investors alike is to navigate these choppy waters by building resilience and resourcefulness into all decisions, cultivating clear sight and intellectual honesty, making sustainability more than just a buzzword, and looking past the clouds into new horizons for opportunities borne by disruption. As the American journalist and writer Borland put it, “No winter lasts forever, no spring skips its turn. April is a promise, that May is bound to keep.”

- Yusuf Özdalga, Partner, Head of UK & Europe

Where the QED Investors team traveled in Q1

Found myself in the city near Piccadilly

March marked the official launch of QED Investors' brand new London office on Piccadilly! Our new office is home to QED’s investment professionals covering early-stage and growth fintech across the UK, Europe, Africa, Middle East, India, and Asia. Along with the announcement of our Fund VIII and Growth II last year, the new office will serve as an important meeting point for investors, founders and ideas as we look to deploy nearly $1 billion in fintech across the globe.

The Middle East

We had a fantastic time during our trip to the Middle East. We partnered with two of the wonderful investors operating in Saudi Arabia and the region as we continue to better understand and map out the region.The QED team co-hosted a breakfast with 9900, whom we know well from our partnerships and co-investments in Europe. The breakfast welcomed attendees from VCs across the broader region, as well as a number of strong companies, including Hala Payments, Pluto, BRKZ and a few others.In the afternoon, we hosted a networking mixer with Outliers Venture Capital, a wonderful Saudi-based venture capital firm with a terrific network of local ecosystem players including fintech CEOs, bank execs and the regulator.

Hello, Dubai

Managing Partner Nigel Morris, Head of Early-Stage Bill Cilluffo and Head of Africa Gbenga Ajayi had a wonderful time in the Middle East.From an incredible fintech mixer co-hosted with VentureSouq to a fantastic breakfast with our peers in the fintech VC ecosystem hosted by Basil M. at Key Capital, we left the Middle East truly understanding that it's a thriving financial technology ecosystem and it's only just getting started. The talent here is on par with any other geography in the world and we're excited to partner with founders and funds across the region.

QED news

Co-founder and Managing Partner Nigel Morris spoke with Crunchbase to discuss fintech funding and the areas and deals he’s most excited about in 2024.

Nigel shares that he believes the fintech winter is behind us and 2024 will look more like a pre-pandemic 2019. He expects to see fintech deal volumes stabilize before rising again and funding numbers to be reflective of what we saw five years ago.

Frank Rotman, co-founder and Chief Investment Officer was featured in the Venture Capital Journal discussing the IPO and M&A market, sharing that he anticipates seeing a small number of IPOs during 2024 while people test the market.

He expects that the real IPO market will open up in 2025. "I think the companies just need more time.”

VCs’ portfolio companies need to be a little bigger, healthier and more mature before they are ready to go public, he told Venture Capital Journal.

Co-founder and Chief Investment Officer, Frank Rotman, connected with Business Insider to discuss the changes taking place in the world of venture capital, including turnover and a slowdown in staffing. Frank shares that those investors who are earlier in their careers have a few options. They might decamp from one firm to another or join a portfolio company.

"They know which ones are healthier than others, which ones are growing."

Partner Laura Bock and Partner and Head of Growth, Chuckie Reddy, had their predictions featured in The Financial Brand, which focused on their thoughts on the state of fintech investments and what we can expect to see in 2024.

Laura shared that she expects we will “continue to see more failures, including high-profile fintech bankruptcies.”

In a similar vein, Chuckie anticipates that 2024 will “be a time to make the tough choices after a couple of years of fearing the shoes will drop.”

Capital One’s acquisition of Discover dominated the headlines over the past month. As the industry continues to make sense of what this will mean for the companies and the credit card industry, Nigel Morris shared his thoughts with Forbes on the matter.

Nigel states, “People worry about financial consolidation but this is a scale business…” “Capital One with its sophistication, analytics and just sheer economies of scale, should be in a position where it'll be able to pass on some of those savings to consumers.”

Payments are a core focus for fintech companies. As cross-border payment companies continue to emerge, The Fintech Times connected with Partner and Head of Europe & UK, Yusuf Özdalga to better understand what businesses should prioritise when looking to offer cross-border solutions. Yusuf shared that there are two primary things for firms to consider when looking abroad: stablecoins and lending.

After a slower year investment in Latin America, 2024 is looking brighter for the region. Partner and Head of LaTam, Mike Packer, spoke with Bloomberg to discuss QED’s plans for the region sharing that he plans to dedicate a bigger proportion of his funding to new investments and less to companies already in QED’s portfolio.  

As the Institutional Investor explored the opportunities, and perils, of Middle East and Africa venture capital, Partner and Head of Africa Gbenga Ajayi discussed the opportunities to solve seemingly giant and obvious problems in the region sharing that, “90 percent of all problems are so profound that traditional investment approaches aren’t effective. They need innovation and that requires VC, he explained.”

Home prices are imploding, and Bloomberg’s Odd Lots podcast invited Partner Amias Gerety to join to help make sense of what’s going on in the insurance market. Amias shares thoughts from both the financial side and the regulatory side, explaining where things have gone wrong and the prospects for market stabilization.

Select portfolio company news


Buenos Aires-based company, Pomelo, announced it raised $40 million in a Series B of funding. Since going live in 2022, they’ve evolved their model to provide local and international companies a way to offer prepaid, debit and credit cards to their customers in multiple countries via what execs describe as “a single technological integration…at a fraction of the cost” of traditional methods. Pomelo has also expanded beyond its home market of Argentina to Mexico, Brazil, Chile, Colombia and Peru.

Hello Alice

Today, Hello Alice announced its Series C funding round bringing their total valuation to $130 million. Hello Alice's platform connects 1.5 million small businesses to capital, connections and opportunities, and will use the new funding to continue to fuel Hello Alice’s expansion of its capital offerings and AI-driven financial health tools for small businesses.


Payhawk announced that it became a licensed Electronic Money Institution in the UK. This license will allow Payhawk to directly issue electronic money, facilitate digital payments and provide card issuance and payment solutions to new and existing UK customers.


In January, fintech-focused software suite provider for consumer businesses, Upswing, raised $4.2 million in a pre-series-A. With the funds, Upswing will expand the reach of its multi-bank deposit product and help build new products around deposits and lending.

Upswing’s low-code BaaS platform allows client companies to embed banking products.


Teamshares announced $225 million in debt financing to continue on its mission to buying small businesses from retiring owners. In 2019, recently launched a suite of small-business financial products, including neobanking, charge cards, business insurance, and health insurance.

With the financing, Teamshares will expand from 89 to 150+ businesses, while continuing to build financial and employee-ownership products to support its growing network of employee-owned companies and the people who power them.


Earned wage access platform for employees, Rain, raised $300 million in February to continue offering workers an alternative to payday loans and high-interest credit cards while a providing retention tool to employees.

Mission Lane

Mission Lane welcomed Brandon Black, who served as a board member since 2019, as its new CEO. In addition to Brandon Black joining, Mission Lane also closed on additional funding to continue delivering better outcomes for millions of Americans.


HR tech startup Remofirst secured $25 million in Series A funding to continue helping companies save money and time while helping them be more compliant, by hiring its clients’ employees and contractors in more than 180 countries on their behalf without those companies having to set up local entities.