Target Company Overview

We are excited to announce our investment in Finoa, a fully compliant digital asset platform based in Germany. Founded in 2018 by Christopher May and Henrik Gebbing, Finoa has developed a sophisticated technology platform that we believe will serve as a cornerstone of the future digital financial services infrastructure within European capital markets and beyond.

Finoa provides a digital asset management solution that caters to institutional and sophisticated investors, including investment funds, exchanges, and corporations. It offers curated access to over 185 crypto assets and the broader Web3 ecosystem. Finoa operates as a BaFin-regulated qualified custodian, delivering an institutional-grade offering with fully segregated customer accounts. As a trusted partner to over 100 institutions, Finoa is poised to expand the range of services it offers, including brokerage, wallets, and governance.

Industry Overview in Germany

The digital asset industry in Germany has seen significant evolution, particularly as institutional investors have begun entering the space more decisively over the past few years. The initial surge of retail investor participation in digital assets has shifted towards a broader acceptance of cryptocurrencies by established financial institutions, even amidst prevalent market fluctuations.

For institutional capital to effectively integrate into the digital asset ecosystem, the market requires robust custodians, regulated broker-dealers, and firms capable of structuring and securitization. This increasing demand for secure, institutional-grade custody solutions and related services is expected to grow as more institutions seek to tap into the potential of digital assets.

Moreover, the irreversible nature of blockchain transactions, alongside frequent security breaches that have resulted in substantial losses—approximately $3 billion from 47 hacked exchanges—highlights the critical necessity for reliable custodians and relevant custody solutions within the underdeveloped digital asset market infrastructure.

Given these trends, firms like Finoa, which possess an integrated range of custody and asset management services for digital assets, will play an increasingly central role in shaping the future of the industry. As regulations evolve to embrace and formalize the operations of digital asset platforms, opportunities for growth will be extensive.

Rationale Behind the Deal

The rationale for investing in Finoa centers on the strategic importance of its offerings in providing essential services to support institutional participation in the digital asset ecosystem. As the market matures, institutions are demanding higher standards of security and reliability from their custodians, culminating in a growing need for services that Finoa is uniquely positioned to offer.

By participating in Finoa's funding round, we aim to assist the company in enhancing its product line and exploring opportunities in new jurisdictions beyond Europe, thus positioning ourselves alongside a future leader in digital asset infrastructure.

Investor Information

MiddleGame Ventures (MGV) participated in Finoa's Series A funding round, which was primarily led by Balderton. Our investment strategy focuses on digital infrastructure, which places us in a strong position to support Finoa's growth trajectory. We recognize the team’s capability and dedication to building a robust platform within the digital asset arena.

As we align Finoa with our portfolio of digital infrastructure investments—including Keyrock, Coinfirm, and Blockpit—we anticipate synergistic benefits that will enhance our collective standing in the rapidly evolving digital economy.

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The investment in Finoa presents a compelling opportunity in a promising sector. Given the increasing institutional interest in digital assets, coupled with the essential role of custodians in this transformation, Finoa’s strategic positioning is highly advantageous. The need for secure, regulated platforms will become more pronounced as the market matures.

Furthermore, Finoa’s comprehensive service offerings not only meet current demands but are also scalable, allowing the company to adapt to future market needs. The managed approach to security and compliance serves as a robust foundation for trust among institutional clients, critical for market expansion.

Based on these factors, this investment could be highly fruitful, reinforcing the notion that Finoa is not just another player, but a pivotal force in the digital asset ecosystem. Supporting such a platform aligns with the overarching trends of increasing digital asset adoption by reputable institutions.

Overall, MGV's backing of Finoa represents a strategic move that could reap significant rewards in the long term, contributing to the establishment of a more secure and sophisticated digital asset marketplace.

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