Naro, a German fintech building fund infrastructure that enables a fair redistribution of ETF and fund earnings to all involved, announced the closure of their €2.7 million pre-seed round led by European investors La Famiglia (now part of General Catalyst) and Discovery Ventures, with participation from founders of European unicorns Flix and Forto, other VCs Angel Invest and Robin Capital as well as operators with leadership experience at fintech companies like Liqid, N26, Plaid, and Trade Republic.
This fresh capital will enable Naro to strengthen its fund infrastructure by forging strategic partnerships, obtaining regulatory licenses, and refining technological frameworks. The ultimate goal is to establish an overarching European fund ecosystem that allows companies to create tailor-made, technology-driven funds to suit their external and internal needs best without carrying any operational or regulatory overhead.
With the help of Naro, companies will be able to create their own investment products such as ETFs and funds without any operational or regulatory burden. As a result, Naro redistributes fund earnings among the parties involved and gives the distributing companies a larger share of the ETF and fund market. It also enables companies to realize their own investment concepts so that they no longer have to rely on existing one-fits-all approaches. Naro’s product range extends from ETFs to index funds and money market funds.
Specific use cases include the use of own investment products for internal deposit use and treasury management, the diversification of the investment offering via own ETFs or increasing of the profit share of existing fund concepts.
Founders Chris Püllen and Nils Krauthausen established Naro in response to the glaring imbalance in today’s capital and financial system. The exponential growth of ETFs in Europe, reaching 1.5 trillion US dollars by the end of 2022, belies the urgent need for a more company-oriented approach. Lower interest rates, higher fees and inferior investment products are the result of traditional ETF and fund solutions not taking sufficient account of the interests of the distributing companies. This forces them into a purely transaction-based monetization model or leaves them with only a fraction of the management fees – this is now being changed by Naro.
Puellen commented: “Access to fair and long-term wealth-building solutions for individual users and companies alike should be a norm. For this to happen, investment products must be shaped after the use case and the companies that need these products – and not after existing one-fits-all approaches.”
Judith Dada, Partner at La Famiglia (now part of General Catalyst), explained the investment in Naro: “The founders of Naro impressed us right from the start with their vision for a modern and fairer fund infrastructure. While many areas of the fintech market have undergone significant transformation in recent years, fund infrastructure has remained largely untouched by digitalization. This market, which is worth 150 billion euros in the EU alone, is now ripe for disruption.”
Founded in 2022, Naro’s potential customer group, which spans brokers, financial platforms, insurers, and (neo-)banks, will benefit from a new substantial revenue stream or safeguarding their assets and maximizing their capital potential.
“By building these products, we enable companies to offer and use more suitable wealth solutions, strengthening the overall adoption of investment products to help people and companies make more of their money. It is time to distribute more fund earnings to Main Street,” added Puellen.
