Berkshire Enters FinTech

Berkshire Hathaway disclosed it made two fin tech investments.  Good to see it.  They invested in some payments companies which makes a lot of sense.  They are also investing in two big emerging markets, India and Brazil.  Makes sense since financial services are not nearly as developed there as they are in more “organized” countries.

The hard thing for Berkshire when it comes to investing in a lot of fin tech firms will be check size.  They are so massive, it’s just not worth the time to do small deals.  One company that might be an interesting play for them is PayPal.  With a market cap of $100B, it’s one they could find enough room in.

We saw huge opportunities to invest in seed stage companies that were revolutionizing fin tech a few years ago.  We have been doing that.  One company our fund is invested in is PipIT.   They have created a new way to do international payments.

One of the things that is pretty cool about fin tech investing is the investment often commoditizes a service that only the wealthy can afford.

When the exchanges were IPO’ing and getting bought up, a friend of mine thought he had done pretty well.  He walked into the JP Morgan office and wanted to get all kinds of services that were available to very wealthy clients.  The banker asked him what his net worth was and when he told him the banker paused.  He said, “I understand that you have done very well.  But, the services you’d like are only available to people that have $100MM or more.”  My friend wondered how many clients that could be and the banker told him a lot more than you realize.

Anytime you can invest in something that helps money flow more cheaply between parties, creates an opportunity for people to learn what to do with the money they earn, makes risk transparent, or creates the opportunity for new technology and new markets to develop, it’s pretty cool.