Embedded finance is one of those terms that has acquired enough definitional flexibility to mean almost anything. Insurance APIs stitched into car rental checkout flows. BNPL products embedded in e-commerce. Corporate cards white-labelled inside HR platforms. Savings accounts offered through utility providers. All of these are legitimately "embedded finance," but they are not the same thing, and they do not represent the same investment opportunity.
The framing that has guided our investment approach is this: embedded finance is fundamentally a distribution problem disguised as a technology problem. The commercial value in embedded finance is not created by the technology that enables the financial product; it is created by the distribution context that makes the financial product relevant, trusted, and high-converting. The infrastructure company that solves the distribution problem — that makes it genuinely easy for a non-financial software company to embed high-quality financial products — has a more defensible position than any individual vertical player could achieve.
The Infrastructure Layer
What does the infrastructure for embedded finance actually look like? At the core, it is a Banking-as-a-Service (BaaS) layer: a set of APIs that abstracts away the regulatory complexity of offering payment accounts, cards, credit products, and savings instruments, allowing a non-regulated software company to offer these products under a white-label or co-branded arrangement without obtaining its own financial services authorisation.
The BaaS market in Europe has been developing since roughly 2018, but the first generation of providers — solarisBank, ClearBank, and their peers — were designed as wholesale banking infrastructure aimed primarily at neobanks and challenger banks. The second generation, which is emerging now, is designed for software companies: ERP vendors, HR platforms, e-commerce infrastructure providers, supply chain management tools. The interface requirements, the compliance characteristics, and the commercial models are different in ways that make a second-generation infrastructure company difficult to substitute with a first-generation one.
Why the Timing Is Now
Three structural conditions have aligned to make this the right moment for embedded finance infrastructure investment. First, the European BaaS regulatory framework has matured: the FCA, BaFin, and the Dutch Central Bank have all developed clearer guidance on passporting arrangements for e-money institutions and payment institutions operating through distribution partners. The compliance architecture is better understood now than it was in 2020. Second, the software platforms that represent the ideal distribution channels for embedded finance — vertical SaaS companies serving specific industries — have reached sufficient scale to make embedded financial products commercially meaningful. A vertical SaaS company with 10,000 SME customers processing transactions through its platform has a genuine embedded finance opportunity; a company with 500 customers does not. Third, the unit economics of BaaS infrastructure have improved substantially as API costs have declined and interchange revenue models have become better understood by operators and regulators alike.
Where We Are Investing
Our embedded finance investment thesis is focused on the B2B embedded lending stack: the infrastructure that allows software companies to offer working capital products to their SME customers using the transaction data that flows through the platform as the underwriting signal. This is a segment where the data advantage is structural — the platform operator has real-time visibility into a customer's business operations that no external lender can match — and where the distribution is captive.
We are also interested in the multi-currency infrastructure layer: the APIs, wallets, and FX primitives that allow embedded finance products to work across the European currency patchwork without requiring either the distributor or the end user to manage currency complexity. Our investment in Stelio (Stockholm) is in this space, and we believe it represents a EUR 1B+ market in a five-year view.
If you are building embedded finance infrastructure for the European market, we are interested. Let's talk.