Q2 provides digital banking and lending solutions to banks, credit unions, alternative finance, and fintech companies in the U.S. and internationally.
Battery has had a long-standing investment thesis around investing in the ‘picks and shovels’ software that powers financial services. This thesis dates back to Battery’s first-ever investment as a firm in HNC Software in 1983. HNC provided fraud-detection solutions for the banking industry. In 1999 the firm invested in Corillian, a software company ushering in the first wave of digital banking by enabling banks to create digital branches on the Internet. Q2 represented the ‘third wave’ of digital banking innovation in the 2010s, enabling financial institutions to take a mobile-first approach to digital banking. At the time of Battery’s investment in 2013, Q2 primarily served the regional and community bank and credit-union market.
Q2 provided an integrated set of services that banks and credit unions could provide to their end customers, including online banking, online bill pay, mobile banking, voice banking and fraud detection/prevention. Battery’s thesis was that advanced e-banking solutions, like those provided by Q2, would become table stakes as consumer behavior underwent a huge, macro shift from visiting bank branches and ATMs in-person to using a bank’s website and mobile app for nearly all banking services.
- Battery helped Q2 execute acquisitions to expand into net-new products and move up-market to serve larger, tier-1 banking institutions.
- Battery was actively involved in executive-level hiring.
- Battery was helpful as Q2 prepared for its initial-public offering, advising the company as it built its technology-infrastructure for public-company quarterly forecasting and reporting; helping to hire bankers; and filling its independent board-member seat.
Q2 completed its initial public offering in March of 2014, trading on the New York Stock Exchange under the ticker QTWO.
The presented case study investment was made in particular economic and market conditions. There can be no assurance that Battery Venture would elect, or be able, to exploit similar opportunities in a similar manner under similar or different economic and market conditions. More generally, there can be no assurances that the Battery vehicles will have comparable investment opportunities in the future. No assumptions should be made that any investments identified above were profitable. It should not be assumed that recommendations made in the future will be profitable or comparable to the portfolio company described in this case study. For a full list of all Battery Ventures investments, please click here.
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