Credit Suisse's Fintech Investment Arm Raises $261 Million War Chest

This is the second fund launched by Next to enter into minority investments in firms.

Greg Grimaldi, co-head and portfolio manager of the fund, says the second fund allows Next to continue with its strategy of investing in firms with proven products, that are looking to expand their businesses.

“The second fund close is a continuation of our strategy of investing into high-growth firms. It gives us enough to invest in over the next few years,” he says. “Consistency is part of our story and that’s how we are moving forward.”

Next has made 72 minority investments into firms over the course of its nearly 20 years, with some of the biggest names in trading among its portfolio. These include Bats, BrokerTec, Market Axess, AcadiaSoft, IHS Markit, and Dataminr. It has spent around $498 million in capital.

Even before the fund closed, says co-head and portfolio manager Alan Freudenstein, Next had already invested in two companies. He says the company is looking to invest in probably 15 to 20 more firms.

“We invest in firms where we see their products are of strong value to their customers and are looking to really expand and grow,” Grimaldi adds. “These involve less capital requirement and they have already proved they can work in scale.”

Next Investors normally finances firms in market structure, data analytics, and enterprise technology, but Grimaldi notes Next does not focus on which sector a company belongs to when deciding to invest in it.

Next understands the environment is different now that financial technology companies can raise capital far easier than 20 years ago, Freudenstein notes it’s important to provide value to the companies you are underwriting.

“It has been an evolutionary process, and yes, the investment environment has accelerated a bit. But the challenge is finding smart capital, you want to enlist value-added thinking and I think that’s where our partnership with Credit Suisse really adds value,” Freudenstein says. “It is easier for companies now to raise capital but we believe that we have a strong proprietary method of choosing who to invest in.”