Yusuf Ozdalga is a partner at QED Investors, an investment company based in London focusing on fintech. He’s a seasoned executive with over 25 years of financial sector experience, including stints as a director, consultant, entrepreneur, and venture capitalist at investment banks like J.P. Morgan and Lehman Brothers.
Yusuf’s current portfolio companies include Fidel API, GetGround, Wagestream, Wayflyer, and Weavr, among others. He’s also a mentor at the global startup accelerator Techstars.
In this interview, Yusuf discusses his investment philosophy, what he looks for in a fintech startup, and why Web 3.0 is so critical to the future of finance.
Yusuf Ozdalga (Full Interview)
Q: What inspired you to join QED Investors?
A: I joined Capital One right out of university, three years after their IPO in 1994. I had worked directly with Bill Cilluffo and Frank Rotman back then, and of course, I had seen first-hand what kinds of businesses Nigel Morris could build. When I saw that Nigel and Frank had launched QED, I immediately knew that not only would QED be a success, but also that they would transform the trajectory of every business they invested in. The rest was just a question of reaching out to Bill and raising my hand to see if they needed my help! Interestingly, I had done a dual concentration in Finance and Management Information Systems (database design) back in university, which had been one of the initial reasons that had attracted me to Capital One which combined technology and finance in a very unique and innovative manner for the 1990s.
Q: Where are the most significant opportunities for fintech-related venture capital moving forward?
A: There are interesting opportunities everywhere, and we try to keep an open mind as we talk to entrepreneurs focusing on a myriad of different verticals. Having said that Web 3.0 and crypto is bringing in an unprecedented sea of change in a great variety of segments, from art ownership to insurance. QED has also always been a geographic pioneer, being one of the first fintech VC funds to enter Lat Am (NuBank was our first investment!) and we are now building our presence in Africa.
Q: What would it be if there was one piece of wisdom you could share with other executives in the fintech industry?
A: Focus on unit economics. The laws of finance and economics will catch up with you sooner or later! The ultimate path to control your own destiny is superior unit economics and studying them closely like a business scientist.
Q: Which trends stand out for you lately?
A: In addition to Web 3.0 that I mentioned above, an interesting trend we have seen is “reverse embedded finance”. This sounds complicated, but it basically means that an entrepreneur can start approaching a customer set with a fintech proposition such as issuing cards, doing payments or even lending, and then build a non-fintech proposition such as a marketplace on top of that customer base. Embedding finance into a variety of applications is becoming easier and easier, and as a result, fintech can now be used as the “hook” that attracts customers.
Q: What are the best ways fintech companies can improve their investment potential?
A: Focus on the fundamentals! This includes unit economics, but equally importantly, culture. Without a solid culture, you will end up with a fragile organisation that is less able to withstand shocks when they inevitably do come.
Q: If you could share one of your favourite quotes related to fintech, what would it be?
A: One of my favourite quotes is something Nigel used to say in the early days of Capital One: “We are not in the consumer finance business; we are in the people recruiting business”. This rings even more true today. Never forget that the real assets of the business are your people that leave on the lift (or log off from Zoom!) at the end of every day.
Q: What positive technological and scientific innovations do you anticipate in fintech over the coming years?
A: I anticipate payments only getting cheaper and cheaper, which while transforming the payments industry will create lots of implications for businesses and entrepreneurs. I also expect consumers and businesses to be more conscious of the value of the data they have access to or generate.
Q: How do you keep up with developments in the industry?
A: I talk to people, whether they be entrepreneurs or fellow investors and colleagues at QED. I also use new products as they come out whenever I can.
Q: Please summarise your business life in three words.
A: Data-driven decisions.
Q: What is next for QED Investors in the coming five years?
A: We are expanding geographically and looking at different ways to support our companies, whether it be finding the top talent or cheap access to debt. Our companies are growing fast, and we like to try and keep up with them.
Q: Last, what is the one thing you want everyone to know about Yusuf Ozdalga?
A: I once won a bronze medal in a highly rated Jiu Jitsu competition.