Financial Venture Studio, a firm focused on investing in early-stage fintech startups, announced Thursday the close of a $13 million fund, dubbed FVS Fund I.
The San Francisco, Calif.-based firm has already invested in 18 companies to date, including some deals involving later-stage companies such as challenger bank Dave. Its average initial investment size in each company is about $100,000, but Financial Venture Studio co-founder and managing partner Tyler Griffin said in an interview that some of its portfolio companies eventually get $1 million worth of total committed capital.
“We’re typically forming those subsequent investments over several months in which we’re working with a company as the founder is raising multiple future rounds,” said Griffin. The firm mostly invests at the pre-seed and seed stages, although it will also put money in Series A rounds.
The selected companies that receive investment also can participate in a six-month bespoke networking program created to help the startups navigate the industry. Networking is a crucial part of the finance industry, Griffin said, but getting into the sector as an entrepreneur is akin to being a great driver in the U.S., and then going to a foreign country and trying to drive a sports car.
“We tend to invest in founders who are very good at building product. They understand their businesses. They understand how to bring a product to market,” Griffin told FinLedger. “But all of the questions and complexities of the financial services ecosystem tend to be very difficult to understand and a lot of that knowledge is held in people’s heads. It’s not like you can just buy a book or read a blog post about it. Even if you could, it would probably be out of date by the time it went to print.”
The venture capital firm raised the funds from institutional investors ranging from pension and institutional funds, insurance companies, commercial banks, family offices and others.
Background
Co-founders Ryan Falvey and Griffin met while working at an accelerator funded by JPMorgan Chase through the nonprofit CFSI (now renamed Financial Health Network). They teamed up to found Financial Venture Studio in 2018.
Griffin has experience as an entrepreneur himself, having previously founded payments company Prism Money, which he sold to PayNearMe in 2016. The pair also recruited Shannon Austin – who was managing director of CFSI at the time – to the team and she now serves as a partner.
Since its inception, Financial Venture Studio has had two exits, including the sale of Sheltr to insurtech Hippo in 2019 and the sale of Joust Banking to ZenBusiness earlier this year.
About three-fourths of the program’s alumni have gone on to raise a total of nearly $60 million in follow-on capital from other venture firms such as QED, Valar, Andreessen Horowitz, Kleiner Perkins and Matrix, among others.
In 2021, Griffin said that the firm will be gearing up for its second fund, which he expects will have an initial target raise of about $50 to $60 million. However, the target raise is preliminary and does depend on various factors such as the coronavirus pandemic, he added.
Looking ahead, the firm is particularly excited about things that can provide greater access to financial products or reduce discrimination around them, “things that use data in sophisticated ways to help consumers make intelligent decisions, and better payments infrastructure.” Austin said. For example, portfolio company Agentero uses data to help independent insurance agents do a better job of meeting customer needs around insurance.
(For more on the opportunities the firm sees, check out its blog post here).
Financial Venture Studio’s fundraise comes on the heels of Better Tomorrow Venture’s announcement that it raised $75 million for its debut early-stage, fintech focused venture fund.