Backed by billionaire Simons, former bank CEO shifts to fintech
INTERNATIONAL - Rakefet Russak-Aminoach, who previously led one of Israel’s biggest banks, has enlisted one of the world’s richest men to bankroll a group to build financial technology companies.
Team8 Fintech plans to raise about $100 million from investors and is backed by billionaire hedge fund founder Jim Simons, according to a person familiar with the matter.
Russak-Aminoach, the former chief executive officer of Bank Leumi Le-Israel Ltd., declined to comment on her investors or the funding round. A representative for Simons declined to comment.
The global fintech industry saw a rapid rise in investment the past few years as startups sprouted in the U.S., Europe and China, offering user-friendly products that stood out in the conservative banking and insurance industries.
“There’s an exceptional imbalance in the financial industry,” Russak-Aminoach said in an interview in Tel Aviv. “It’s not like when we drive with Waze or text with WhatsApp and think, ‘What a great experience.’ Customers of the incumbent firms aren’t getting the experience they want.”
Investors, though, have lately become skittish because of the economic contraction resulting from the coronavirus pandemic, pulling back investments by about 35% in the first half of the year to $25.6 billion, according to data from KPMG. The high-profile scandal surrounding Germany’s Wirecard AG also damaged the sector’s reputation, and now some investors are insisting on profitability before piling in more cash.
Russak-Aminoach, 54, is starting what she calls the “third and last stage” of her career in an emerging area for fintech. Despite Israel’s relatively small banking and insurance sectors, distant from international financial hubs, investments in fintech startups there garnered 5% of the global tally in 2019, according to Start-Up Nation Central, a non-profit organization that tracks the country’s tech industry.
Russak-Aminoach aims to build on this growing demand for Israeli tech using the foundry model, which she compares to a holding company. Team8 will bring the initial idea, seed money and set up a company skeleton, and then pair up with local entrepreneurs, who will get roughly half the equity. The new companies will then seek outside investment in future funding rounds.
Team8 Fintech is in the initial stages of founding a company that provides credit for e-commerce businesses, and plans to create about six startups in the next 3 to 4 years, she said. The focus will be on building companies servicing major financial and e-commerce firms, to avoid a costly process of acquiring customers, and then analyze data in order to specialize financial products to millions of individual clients, she said.
“Our approach is to go to the companies with the big customer bases,” Russak-Aminoach said. “Then we’ll bring the engine that they don’t have.”