Fintech has become more popular than ever due to Covid-19. As the World Economic Forum highlights, “Financial technology (fintech), playing a critical role in reducing coronavirus risks associated with exchanging cash, helping micro, small and medium enterprises and supporting financial inclusion in developing markets during the pandemic and beyond.”
Better Tomorrow Ventures (BTV), a $75M fintech-focused VC fund based in San Francisco, invests in pre-seed and seed startups. Founders of BTV Sheel Mohnot and Jake Gabson believe that financial technology is a great way to improve people’s lives.
Our Venture Partner Duygu Oktem Clark spoke with Sheel Mohnot of BTV about fintech and investing in fintech startups:
Duygu: Sheel, how and when did you realize your passion for fintech?
Sheel: It kind of happened accidentally. I started on the nonprofit side, actually in fintech. So, my first foray into fintech was at Kiva. Kiva is a website that lets individuals in the developed world make a loan to individuals in the developing world for the sake of alleviating poverty. We started that back in 2005. And I went there originally as a volunteer and then realized that this is a website where people can actually change people’s lives. It’s tremendous like finance meets technology, an amazing way to change people’s lives, and really is a huge beneficiary at scale. So, that was sort of my first realization. And then I realized “Hey, I really like it”. I really like investing in fintech. It’s very fun, and it’s now become my expertise.
Duygu: You use the phrase “BWS” in order to describe the future of fintech. What do you mean by BWS?
Sheel: BWS is the abbreviation of Banking Web Services. First of all, now, it’s got a bunch of better terms than BWS, which I started calling it. The term that everybody uses now, is “BaaS” banking as a service.
Duygu: I think BWS is a cooler name.
Sheel: Yeah, but I can’t win when everybody else already uses “Banking as a Service”. So, it is what it is. :)
Duygu: You have been investing in pre-seed and seed startups. And the founding team of a startup is important for you. How do you assess founders? What do you look for in founders? And what are some early red flags for you?
Sheel: I definitely look at the clarity of vision. The person that I meet is typically the CEO. And they have to be able to articulate what their business is to me. But they also need to articulate it to future employees, to later investors, and to customers. And if they can’t clearly articulate it, to me, they can’t clearly articulate to anyone is sort of my thinking. And then, we do look for people who have some background in this space. Especially in fintech, it’s useful to have folks who’ve done it before.
Duygu: Before becoming a VC, you were an entrepreneur. You founded and sold two startups, and you co-founded a healthy meal delivery startup. What was the hardest part of entrepreneurship for you as a founder?
Sheel: I think there are always good days and bad days. There are high highs and low lows, and some of the lowest lows. I think the biggest thing is that you take everything personally because you’re so tied up in the business. Everything that happens to the company feels like a reflection of you.
Duygu: What is your superpower?
Sheel: I think I’m just incredibly lucky.
Duygu: Well, that is a modest answer.
Sheel: I think I have done a good job of building relationships. And that’s relationships internally, externally. I like working with people. I’m a people person. And that has worked out really well for me in my career. And I enjoy thinking through and strategically, you know, creating a partnership that makes sense for all parties involved.
Duygu: I was going to ask about your superpower as an investor but your superpower as an entrepreneur is also applicable as an investor.
Sheel: It’s applicable, definitely applicable.
Duygu: Let’s talk about Better Tomorrow Ventures. It is a $75 Million fund and you’ve invested in startups in the Bay Area, in New York, and Mexico City. What is your strategy in terms of investing internationally, especially after COVID-19?
Sheel: We’ll invest anywhere in the world. We like large opportunities in large markets with strong entrepreneurs. And pretty much you know, we’ll invest anywhere within our space, which is fintech.
Duygu: What is your favorite topic to help founders in your portfolio?
Sheel: I really like to help them think through partnerships. I like to help think through the next round of financing, and what they need to do to get there. I like to help with the product. Those are sort of the ways that I do it.
Duygu: What are emerging trends in fintech that you see nowadays and how do you think COVID-19 has been shaping the future of fintech?
Sheel: I’d say like, one big trend is digitization. It’s been really good for fintech overall, people don’t need to go to meet people in person. And that’s really good for technology as a whole. And it applies to fintech too. Because, you know, you don’t want to go into a bank branch. You just want to do it over your phone. And so that is really good for us.
Duygu: What is one thing you wish you knew about launching your own fund?
Sheel: I mean, there are a few things that like, we should have structured differently. Like I guess one thing, I didn’t have a good appreciation for is how our LPs could actually be very strategic to us. We should have brought on more LPs that send us deal flow. It’s very counterintuitive, but it makes sense. It’s now really working well. And I wish we had thought through that better ahead of time.
Duygu: Ok, now I’m going to ask you some questions to get to know you.
What did you want to be when you grow up?
Sheel: I actually wanted to be like, in politics. I wanted to be like the mayor of Pittsburgh.
Duygu: Maybe one day, why not?
Sheel: Yeah, one day perhaps but probably not :)
Duygu: What’s your favorite city for vacation?
Sheel: I really like Mexico City.
Duygu: What country have you never visited but you are dying to go to?
Sheel: I’ve never been to New Zealand and I’m dying to go.
Duygu: Coffee or tea?
Sheel: Tea, but actually, I don’t drink much of either.
Duygu: Oh, what’s your favorite drink then?
Sheel: Probably water.
Duygu: If you had to use just one social media app for the rest of your life, which one would you choose?
Duygu: What is one thing you would love to master?
Sheel: I would love to master the relationship with the city I mentioned earlier. I’d love to speak Spanish, which I don’t.
Duygu: If you could spend one day with anyone who has ever lived, whom would you spend it with?
Sheel: Benjamin Franklin.
Duygu: Okay, last question: Tell us something about yourself that nobody knows.
Sheel: Hmm. That’s a tough one. Okay, good question, but I can’t think of anything. I’m very public on the internet. So, everybody kind of knows everything about me. There are no secrets.
Duygu: Thank you so much for your time Sheel.
Sheel: Absolutely. Thank you!