DealmakingDiversity

PayPal-backed Zeal Capital launches $50M fund to invest in diverse fintech founders

'The future of financial services will be inclusive investing'

Zeal Capital Partners, a new firm investing in high-growth startups “at the intersection of financial technology and the future of work,” announced Monday the first close of a targeted $50 million fund.

Nasir Qadree, founder and managing partner of Zeal, said the fund has raised $22.3 million thus far, anchored by PayPal and investors such as The Alfred P. Sloan Foundation, family offices, “notable” business leaders, and other investors. The final close is expected to occur around mid-December.

Zeal’s investment thesis involves its trademarked Inclusive Investment strategy, which will focus on seeking opportunities in early-stage businesses led by diverse management teams in parts of the country “beyond the traditional geographic hotbeds of venture capital activity.”

“…It’s abundantly clear that we need more businesses delivering solutions to bridge the wealth and skills gap at scale,” Qadree said.

Washington, D.C.-based Zeal plans to invest in 20 to 24 companies over a four-year period with an average investment ranging from $250,000 to $2 million. It seeks to invest in fintech companies that create alternative financial products, such as credit expansion tools, financial management services, and resources that will help small businesses be successful. 

“We believe the future of financial services will be inclusive investing,” Qadree told FinLedger. “I believe that when we lean with inclusion, that organically yields a more diverse pipeline of entrepreneurs.”

Zela’s first investment was in fintech startup Esusu, which announced a $2.3 million seed round in August. The company has a built a savings app – which targets immigrant and minority groups – with the aim of helping people increase consumer credit scores while also lowering eviction rates.

Zeal plans to invest in three more companies by year’s end.

“The world doesn’t need another food delivery app,” Qadree told FinLedger. “We need.new forms of credit access expansion or financial ways to change consumers’ financial behaviors.”

Mario Ruiz, who led PayPal’s investment in Zeal’s new strategy, said its backing of the new firm reflects its belief “that access to financial services creates opportunity.”

Elizabeth Hewitt, chief investment officer of the Sloan Foundation, said that the organization’s investment is geared toward helping make science, technology, engineering, mathematics and economics more accessible and inclusive. Because if they are not, she added, “these become the very drivers that create inequality and hold communities back.”

Most recently, Qadree served as the associate director, leading AT&T’s Aspire Social Investment Fund, a $400 million investment vehicle focused on early-stage tech-enabled for-profit education, employment technology, and human capital management businesses.  Prior to AT&T, Qadree invested in fintech and a variety of other verticals at Village Capital. He began his career as an analyst at Goldman Sachs.

Inclusive investing is a topic that FinLedger has previously examined in a number of recently-published opinion pieces and articles including the following: Accelerating through change: Redefining finance for good; Why so low? Fintech continues to see lack of female founders and The rise of new banks serving Black and Latinx communities.

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