Illuminate Raises $235 Million From Big Backers for VC Fund

UK venture capital firm Illuminate Financial raised $235 million for its third fund from investors including Bank of New York Mellon Corp. and Euroclear

The fund — the London-based firm’s largest — will invest in startups that offer technology services to financial institutions, Illuminate said on Tuesday. Existing Illuminate strategic investors including JPMorgan Chase & Co., Barclays Plc and Jefferies Financial Group Inc. also put money in the new fund, according to Illuminate. 

Illuminate was founded nine years ago by Mark Beeston, a former senior executive at TP ICAP Group Plc and Deutsche Bank AG, and also operates out of New York and Singapore. It has backed 35 companies including digital asset market infrastructure firms Copper, Blockdaemon and Baton Systems.

Illuminate closed the round even as fundraising by fintech companies has slumped and some investors slashed the valuations for their holdings of privately held startups like Revolut Ltd. Global financial institutions are projected to spend $57 billion maintaining outdated payments systems alone in 2028, up from $36.7 billion in 2022, according to a study by IDC Financial Insights.

“The need for solutions across multiple areas remains stronger than ever,” said Beeston, who was head of post-trade risk and information at ICAP before he started Illuminate, said in an interview. He declined to provide return figures for the firm’s two earlier funds. 

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Fintech companies raised $15 billion in the first three months of 2023, down about 50% from a year earlier, according to CB Insights. Beeston said the tougher fundraising environment has led to more attractive valuations. 

“It takes a while for founders to adjust their own expectations of value, but that has been starting to properly come through in 2023,” he said.