The fintech industry is abuzz—and it has nothing to do with the next app or online bank. Venture capital is pouring into the sector, led by niche firms and seasoned entrepreneurs who are redefining the playbook for early-stage companies. Here’s a closer examination of how the new generation of investors and operators is remaking the future of fintech, informed by lessons from Silicon Valley’s greatest successes.
Fintech’s Gold Rush: Why Specialized VC Firms Are Winning
The financial sector is in the midst of a digital shift. From insurance to payments, startups are transforming how money moves and how consumers interact with financial products. That trend has not gone unnoticed by investors, with specialized venture capital firms at the forefront.
One shining example is Better Tomorrow Ventures (BTV). Started by Sheel Mohnot—a former general partner at 500 Startups’ fintech fund—and Jake Gibson, co-founder of NerdWallet, BTV just closed a whopping $75 million initial fund, beating their initial $60 million target. Their success in raising capital even amidst the struggles of COVID came as a shock to many initial supporters. As Cendana Capital’s Michael Kim said, “Remarkably, they raised a lot of it during COVID.”
What Sets BTV Apart? Founder-Led, Fintech-Focused, and Hands-On
BTV’s advantage is that its founders come from operating backgrounds. Mohnot and Gibson, both an operator-turned-investor duo, feel this equips them with a better idea of what fintech founders are creating. “We just do fintech,” says Mohnot. “So we understand better what founders are creating than generalist investors.” With this laser-like focus, they can strike deals at reasonable prices even amid skyrocketing prices.
Gibson further states that BTV targets significant ownership in every company with their seed round, hoping for about 12% at the outset. They also tactically employ special purpose vehicles (SPVs) to hold on to stakes in breakout firms—a strategy that has been honed over decades of angel investing.
The Rise of Stealth Seed Rounds: Why Startups Are Keeping Quiet
Incidentally, several of BTV’s investments go unnoticed. Mohnot says, “Nobody announces their seed rounds anymore.” This is a departure from the earlier startup days when touting seed rounds was routine. Gibson attributes this to intense competition—entrepreneurs don’t want to alert competitors or imitators. These days, seed rounds tend to go unreported until a startup is ready to fundraise Series A, which means industry monitors like PitchBook tend to be behind the times.
The Fintech Landscape: Opportunities and Realities
BTV’s investment thesis is simple: it’s all fintech, or it soon will be. Their investments cover payments, lending, banking, real estate, insurance, and B2B and consumer-oriented businesses. Gibson identifies numerous businesses beyond traditional finance that will inevitably embrace fintech-like models as technology platforms unify financial services.
But not all trends are predestined for success. Gibson is dubious about neobanks, citing the fact that most of them cannot seem to crack profitability. The economics require a huge scale, and marketing expenses are exceedingly high. Likewise, following Plaid’s high-profile exit, numerous “Plaid for X” startups cropped up, but customers are still highly competitive to win.
On regulatory issues, Gibson is not too perturbed by the Department of Justice’s move to stop Plaid’s takeover by Visa, thinking that Plaid has strong prospects for a successful IPO, particularly in the wake of the flood of fintech-targeted SPACs.
It’s not just venture capitalists determining the future of fintech—veteran operators such as Gokul Rajaram are providing priceless guidance to founders. Rajaram’s background features top jobs at Alphabet, Block, Coinbase, DoorDash, Meta, Pinterest, and The Trade Desk.
He underlines reducing friction before a product’s “magic moment,” a lesson from Sergey Brin at Google. Rajaram also points out Mark Zuckerberg’s unrelenting “founder mode,” which beat Facebook past Google Plus, and Jack Dorsey’s perpetual selling that drove Square’s expansion. These tips, discussed recently with Turner Novak, provide a hands-on playbook for founders in today’s competitive fintech world.
Seed Investing Today: Speedier, Smarter, and Data-Driven
Seed investing has come a long way from 2007. According to Rajaram, investors today act more quickly, and founders must define their desired customer profile (ICP) with clarity. He believes that one should size markets bottom-up, based on true data as opposed to wide-brush estimates, to sidestep expensive mistakes and concentrate on real opportunities.
He also warns against startups awarding Director or VP titles too soon, citing that premature hierarchy can dampen decision-making and hinder agility.
The Takeaway: Focus, Speed, and Empathy Win
The new wave of fintech venture capitalists and tech veterans proves that deep domain expertise, genuine empathy for founders, and a willingness to rethink traditional approaches are critical to success today. Whether you’re building the next big fintech innovation or keeping pace with the industry’s rapid evolution, these frontline insights offer valuable guidance.
