crossroads magazine In 2020, Pascal Bouvier co-founded Middlegame Ventures, a venture capital firm investing in early-stage growth busi- nesses focused on financial innovation. Since then, it has invested over €120 million in more than 30 companies. We spoke to Mr Bouvier about investment trends in fintech and the keys to long-term success in this field. What will be the top themes in fintech innovation sought by investors in the next few years? Pascal Bouvier: We invest in fintech applications and infrastructure for enterprises, SMEs and financial in- stitutions and focus primarily on capital markets and asset management, where many processes are manual or semi-manual and much can be digitalised. In this field, we see great potential for smart process automa- tion and tools powered by artificial intelligence. A second important theme is tokenisation of both digital and physical assets. Several EU member states – including Luxembourg – have already tokenised pub- lic debt using blockchain and the distributed ledger technology, and we expect a significant shift towards tokenising real-world assets in the coming years. The process of tokenisation preparation and issuance gen- erates new opportunities for value creation. How do you see emerging technologies like AI influencing the fintech sector? The impact of AI has already been radical. Software companies will be at great risk, as AI makes it possible to create, develop and duplicate software with far few- er people and at a fraction of yesterday’s cost. We can see that the market no longer expects the same growth from traded software companies as before the intro - duction of AI tools. AI has also prompted us to revise what we look for in startups. Fintech companies that need a licence to operate are building systems of record that are difficult to reproduce and/or embedded in, or close to, a transaction flow, and have the best chances of generating value over the long term, even in a world of AI tools. How important is scalability and global reach for fintech startups seeking investment? Middlegame Ventures invests in startups from seed to series B. For companies at this level of maturity, we have three main criteria: their product, their team and their market potential. We need to see that the product or offering makes sense and that the team is resilient, committed, open to coaching and eager to learn. Cre- ating and scaling a business is very difficult, and an open-minded team with exceptional talent increases the chances of success. We also want to be convinced that the market is big enough for the startup to reach approximately €100 million in revenue over seven years. If their global market is €10 billion, the objective is feasible, but if it’s only €500 million, it will be very difficult to achieve.