Cologne-based FinTech NaroIQ has raised more than US$6.5 million (€5.85 million) in a seed financing round. The round is led by VC investor Magnetic, which specialises in critical infrastructure, followed by Redstone, a well-known European FinTech VC. Existing venture investors, including renowned US-based VC General Catalyst, have increased their stakes.
The platform enables companies to launch and manage ETFs and funds with enhanced digital capabilities and greater cost-efficiency.
Driving competition in the ETF and fund market
While the European ETF and fund market sees record inflows, outdated manual processes create barriers to innovation and broader market access, which concentrates assets among a handful of providers.
NaroIQ’s solution for funds and ETFs addresses this challenge directly: The digital infrastructure platform reduces the costs of launching new and managing existing ETF and fund products. This ensures a faster time-to-market, more flexible product development and lower initial investments. NaroIQ opens up new access to the financial market and existing providers such as banks, insurers and asset managers can work more efficiently and cost-effectively.
We are witnessing a once-in-a-generation shift: “ETFs will replace mutual funds in the retail market over the next decade, which means that margins will shrink significantly,” said Chris Püllen, Co-founder and CEO of NaroIQ.
“Without a technological solution, only large fund providers with scale advantages will survive, creating an alarming concentration of power and wealth in the market. Our digital fund infrastructure levels the playing field, allowing smaller fund providers and management companies to offer their own ETF and fund products profitably, while ensuring investors continue benefiting from diverse investment options and innovative ideas.”
Europe’s untapped billion-dollar market opportunity
According to EFAMA, the European UCITS and AIF market represents a total volume of €22.9 trillion in assets, but is based largely on outdated infrastructure.
David Rosskamp, Founding Partner at Venture Capital Firm Magnetic, said: “With foundational financial services still reliant on manual, fragmented back-end processes, NaroIQ’s digital infrastructure is critical to unlocking efficiency, real-time transparency and cost savings.
Europe’s ETF paradox: The need for sovereign infrastructure
NaroIQ solves a critical paradox and a structural weakness of the European ETF market. It is one of the largest ETF markets in the world, yet a few players dominate it and it lacks a powerful European ETF administrator. The five largest ETF issuers account for 75 percent of the market share, while US-based issuers manage two out of three and administrate four out of five of all European ETFs. As geopolitical tensions continue to grow, financial sovereignty becomes increasingly strategic. Therefore, Europe’s financial institutions are actively seeking local partners and looking to diversify their assets, creating a clear market opportunity.
