Dealmaking

With hiring of Lauren Weston, Thomvest Ventures doubles down on fintech

Pandemic heightens opportunity for fintech startups to compete with incumbents

Last month, Thomvest Ventures announced the hiring of Lauren Weston as a new investment associate.

While we’re not typically in the habit of covering new hires at venture firms, this announcement caught our eye for more than one reason.

Weston will be working closely with Thomvest Principal Nima Wedlake, and the pair will be focusing on early-stage investments across financial technology and real estate verticals. Also, it’s not every day we see females being tapped to serve in leadership positions at VC firms.

For reference, San Francisco-based Thomvest Ventures is an evergreen fund, which allows for long-term capital. Thomvest Ventures is not a traditional fund that raises capital from limited partners (LPs). Instead, it is investing the capital of one individual, Peter Thomson, whose family owns the majority of Thomson Reuters. 

The firm, which has slightly over $500 million in assets under management, counts a number of fintechs in its portfolio including: online mortgage lender Blend, Kabbage, SoFi and LendingClub (which went public in 2014), among others.

Prior to joining Thomvest, Weston worked in equity research at Morgan Stanley, where she covered residential and commercial real estate companies and focused on the impact of technology across real estate sectors. She started her career as an investment banking analyst at Morgan Stanley, where she worked on debt and equity financings for asset managers, insurance companies and large financial institutions.

At the time of her joining, Thomvest Managing Director Don Butler said Weston’s hiring is in line with the firm’s continued focus on investments across financial technology and real estate verticals.  

Last week, I hopped on Zoom with Weston to hear more about what kind of companies she’s looking to invest in, her take on startups taking on incumbents and what it’s like being a female investment associate in a male-dominated industry.

FL: Tell me about your background and how you think it will help you as an investor in the fintech and real estate spaces?

LW: I started my career as a capital markets banker, and in that role, I was working with asset managers, insurance companies and sort of large financial institutions and helping them raise debt and equity capital in the public markets. The role is one where you’re a product expert, and you are working with companies to think about their capital structure. You have to work with institutional investors who are putting their money to work, and at the end of the day, really have a pulse on the market and understand the sector as well as the sort of the macroeconomic and geopolitical events happening. Then  I transitioned into equity research because I really wanted to dive deeper into companies and better understand how management teams thought about growing and investing their businesses.

I then went from covering financial services to real estate. I really saw real estate under the broader umbrella of financial services as it is inherently a levered asset class. And when you think about real estate transactions – mainly like how we buy, sell and operate real estate – they all involve financial transactions. So that was really interesting to me, too. I wanted to better understand how technology was shaping that industry, which historically has been sort of a laggard in terms of tech adoption.

A big theme that we’re seeing is how fintech is really becoming embedded in so many different technology applications, and so I think that a lot of my work will be at the intersection of fintech and real estate tech, or proptech if you will. 

FL: On the theme of embedded finance, are there specific applications or end-markets where proptech would benefit from further integration with fintech capabilities?

LW: In the home buying process, there is an opportunity for software companies to further embed financial products and develop a comprehensive product roadmap to service all aspects of the home purchase and experience. For example, Blend started as software that helped banks to streamline digital mortgage applications and has integrated homeowners’ insurance, deposit account openings and auto loans. Property management is another interesting end market, particularly for single-family landlords. There is an opportunity for property management platforms to provide a fully integrated solution that enables flexibility and customization across rent payments, cash flow management, and the acquisition and disposition of properties. 

We have also seen companies such as Ladder Life embed their life insurance application into the application process with companies focusing on the home mortgage space. One of the life events that causes people to buy a home or upgrade to a larger home, such as having children, are often the same life events that make people think about life insurance. So embedding a competitive offer for something such as life insurance into a process that a consumer is already going through can make the entire process much easier for consumers.

FL: The Thomvest portfolio has a mix of B2B fintech solutions and consumer fintech applications. Do you see an opportunity for outsized growth for B2B tech as incumbents battle to keep up with challengers?

LW: B2B tech presents interesting opportunities as incumbents are still not meeting consumers where they want to be served. While incumbents have higher user bases in absolute terms, digitally-native mobile fintechs continue to show higher growth across user base and engagement per user, reflecting the gaps where incumbents are still not meeting consumers where they are. Within B2B, infrastructure fintech presents an opportunity to facilitate collaboration between incumbents and fintechs, automate middle- and back-end legacy systems and empower software companies to offer their own suite of financial services products to customers. With the emergence across several product categories of digital-native fintechs that are getting to scale, there is a unique opportunity to focus on the B2B segment to enable incumbents to match the ease-of-use and end-user capabilities of newer fintechs. 

This opportunity has also been heightened by the current pandemic. The pandemic has in many cases removed the retail distribution capabilities of many financial services incumbents. Fintech startups have a much better chance since they are competing now on the experience on the web and mobile. The result is that we think the pandemic has heightened the need for incumbents to respond and thus opened the way for partnerships with B2B providers in the space.

FL: You’re a female VC in a male-dominated industry. What are some of the challenges you’ve faced as a result? What do you think it’s going to take to see more women become investors or venture capitalists?

LW: I’ve definitely noticed the lack of representation of women, and also women of color in particular, in the real estate industry as well as at the intersection of real estate and financial services. I believe there is a lot that can be done to impact the lack of representation of women and women of color in VC. In my new role, I am focused on taking up space in the room,  working with the Thomvest Ventures team, and building my network across founders and other VCs. I also hope to be a resource to other women and women of color who are interested in working in the VC industry.

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