The French fintech has raised its investment capacity after a successful funding round with a group of investors.
Aydo, a French fintech platform for structured products, has raised undisclosed new funding from venture capital investors.
The funding round was led by Digital Tech Fund, a venture capital fund from Expon Capital, a Luxembourg-based VC firm. Other investors include VAEX Capital Partners as well as strategic angel investors from the fintech industry.
The company will use the capital raised to grow its client base and develop its Shape platform with new tools and functionalities as well as “modernise processes, reduce inefficiencies, and drive innovation”.
“Shape is designed to cover the entire structured products value chain, including product and price discovery, as well as lifecycle management,” Arthur Teixeira (pictured), founder and managing partner at Aydo, told SRP. “The goal is to provide investors and advisors with a tool that allows them to operate in this space more efficiently, hence enabling an allocation of human resources where it matters most.”
The funding round will enable Aydo to make significant investments in technology to implement its vision, “especially in highly regulated environments”.
“The funding will allow us to expand the user base of Shape, which was previously limited to a smaller number of users,” said Teixeira, adding that the plan is to significantly expand the distribution and accessibility of the platform, starting early next year.
“This will involve improving the technology and capabilities of the platform in a short timeframe. We also plan to expand our sales force to support the wider distribution target,” he said.
Market challenges
Teixeira noted that “the structured products industry is booming, with the traded volume more than doubling in the past three-four years” and that historically, structured products have offered control, predictability, and have been widely adopted in wealth management.
However, despite this growth, according to Teixeira, parts of the structured products value chain remain untouched by innovation.
“This has led to some key issues such as massive consumption of human resources on the advisor and investor side for tasks like product discovery, pricing, and lifecycle management,” he said.
Another issue, identified by Teixeira, is “investor focus on product parameters optimisation without being capable of assessing the chances of success of a given product”.
“Opportunity costs due to outdated product selection and optimisation processes are hindering performance,” he said. “Some quantitative work is highly needed to optimise the actual performance of these products.”
In addition, mis-selling remains one of the market challenges and main concerns as structured products are more complex than standard products and require more explanation and insight.
“While the structured products market is growing rapidly, there are still significant inefficiencies and challenges that need to be addressed in the value chain,” said Teixeria.
Looking at the company’s regional footprint and the expansion to new markets, the focus will be on expanding Aydo's presence within existing markets in continental Europe and the Middle East.
“We are not currently looking to explore opportunities in new markets beyond these two regions,” said Teixeira. “The goal is to become stronger and increase market share within the markets we are already active in, rather than expanding to completely new geographic areas at this stage.”