Fintech-focused venture firm Better Tomorrow Ventures has raised $225 million early on for its second fund — three times the amount it raised for its debut fund, which closed in September 2020.
Founded by Sheel Mohnot and Jake Gibson in November 2019, San Francisco-based Better Tomorrow Ventures (BTV) has allocated $150 million to invest in pre-seed and seed-stage startups. It has also set aside $75 million for a follow-up investment opportunity fund.
Fintech’s recent explosive growth is reflected in the increase in fund size for BTV, and the company remains fully focused on the space.
†We have a very broad view of fintech and think we are in the early innings here,” said Mohnot.
Mohnot and Gibson plan to make about 30 investments from the new fund, with checks ranging from $500,000 to $3 million. It has been pledged to three so far. BTV led 22 investments from its first fund and performed 10 other “non-lead checks”.
BTV is a venture company with two successful fintech founders as partners. That experience gives them an edge in a highly competitive investment environment, the couple says.
Gibson co-founded NerdWallet, where he was also COO from 2010 to 2014. went public last year.
Mohnot previously served as vice president of business development at Groupon after a startup he founded, FeeFighters, was acquired by the company in 2012. The technology developed at FeeFighters became Groupon Payments, which was launched shortly after the acquisition, according to Mohnot. In 2013, he co-founded Innovative Auctions, which has a turnover of ‘hundreds of millions’.
The landscape for investing in fintech startups has certainly become extremely heated as more companies look to support companies in the space. But BTV believes its historic fintech focus appeals to many founders, so it has “a pretty good track record of winning deals over other funds so far.”
The company takes a very hands-on approach and aims to help its portfolio companies hire, think through distribution, build a corporate culture, forge strategic partnerships and increase their next rounds.
“We are founders ourselves and think we can have the most impact in the seed stage,” Mohnot said. “Seed is where founders need the most support, and we love being the first.”
According to BTV, the next generation of fintechs will include vertical SaaS companies and marketplaces looking to create stronger relationships and more comprehensive offerings to their customers.
“To capitalize on that trend, we like to invest in companies that make it easier for those non-fintech companies to become fintech companies,” says Mohnot. A few examples from his portfolio include: Unit and salsathat allows companies to build banking or payroll into their existing products.
“As the war for tech talent gets crazier, it makes more sense for companies to buy products rather than build them ourselves, which we also see a lot of,” the investor said. BTV has also supported Pave, which aims to help companies gain clear insights into their data with the aim of saving developers and data scientists time for startups.
The company also supports unicorn for corporate expense management drivewayalbert, ChipperCash, Kin, Arrange† clearco† Self book and Human interestamong other things.
Almost all of his LPs came back for his latest album, according to Mohnot. It also added a number of people who had been following the company since the first fund but “wanted to have more of a track record of working together,” he said.
“It all happened pretty quickly, so there were several LPs that we would have liked to have, but we couldn’t fit in,” Mohnot said.
Prior to BTV, Gibson and Mohnot invested in more than 100 fintech companies through other investment vehicles, including 500 fintech.
BTV is one of many fintech-focused companies that have recently been raising new funds. For example, in Sept. QED Investors announced the closing of two new funds $1.05 billion in total, capital it will use to support early-stage startups as well as growth rounds for later-stage companies.
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