Nasdaq To Create Venture Capital Arm For Fintech Investing

Nasdaq, Inc. is the owner of the Nasdaq Stock Market, the second-largest stock exchange in the world by market capitalization. Nasdaq, Inc. is allegedly planning to create a venture capital arm, according to two sources familiar with the project. The sources have remained anonymous as they were not authorized to make any public announcements.

The venture capital division would be responsible for investing in fintech companies, looking to firms that could help to grow their business. Nasdaq would be joining the likes of CME Group, Citigroup, JPMorgan Chase & Co, and others who have created similar investment divisions.

How much Nasdaq is planning to invest is unknown, although one of the sources did describe the amount as being “modest” compared to their overall earnings. Seeing as how Nasdaq made $2.3 billion in net revenue last year, that “modest” amount could still be a substantial figure.

While Nasdaq is mostly known as a stock exchange, they are also one of the biggest providers of stock trading technology to other exchanges and companies. Nasdaq was one of the earliest proponents of blockchain technology, due to the blockchain’s many benefits to trading, and have already been actively investing in fintech startups.

Last month, Nasdaq’s new CEO Adena Friedman, was on CNBC. She spoke about the company’s plans to focus more on new technology, saying:

"Areas of focus for us in terms of big projects are all around technology. It's a matter of making sure that we continue to take all of the new technologies that are available in the marketplace and [offer] them to our clients."

Nasdaq has already invested in the blockchain startup, Chain.com, as well as an artificial-intelligence company called Digital Reasoning. This speaks to their interest in staying on top of emerging, potentially disruptive technologies.

Their venture capital arm wouldn’t only be investing money into companies, but would help businesses to develop technology faster. So they’re not just investing in their own future of utilizing blockchain’s benefits, they’re fostering technological growth, which is great for the entire fintech sector.