FinTech fund Portage is putting together a structured equity fund focusing on backing late-stage financial technology startups.
As Reuters reported Thursday (July 28), the Toronto-based company said this fund is aimed at FinTechs that are wary about taking a hit on their valuation as the market declines.
Portage hopes to raise up to $1 billion, investing in securities that meld debt and equity features and don’t force startups to lock in a valuation the way they would with traditional equity fundraising, Adam Felesky, the company’s co-founder and CEO, told Reuters.
“We’re a liquidity provider in environments that otherwise would be quite difficult,” Felesky said.
A source familiar with the matter told Reuters that Portage is aiming to raise $750 million to $1 billion for the fund, with a $200 million capital commitment.
Read more: Once-Hot FinTech Sector Loses Half a Trillion in Valuation
The report noted that startups have shown reluctance when it comes to traditional fundraising amid the financial downturn because it would mean accepting a lower valuation.
As PYMNTS has reported, this year has seen Swedish payments firm Klarna lose 85% in valuation while its rival in the buy now, pay later space Affirm Holdings saw its value drop by 80%. PayPal and Block lost a combined $300 billion in market capitalization, while Stripe slashed its valuation by more than 25%.
Overall, this once popular space has shed half a trillion in valuation as the cumulative value of shares of newly-listed firms in the sector fell $156 billion in the first six months of the year. Initial public offerings (IPOs) escalated in the FinTech space when the pandemic began in 2020, but now plans to go public are in limbo and valuations plummeting as companies try to cut costs.
The value of IPOs around the world fell 71%. In the U.S. and Europe, 157 companies raised $17.9 billion in total in the first five months of 2022, compared to 628 companies raising $192 billion in the same period last year.
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