When he’s not investing in fintech deals from around the world, investor Sheel Mohnot spends his time touring the globe.
At least that was the case prior to the covid-19 pandemic. A look at his Instagram from past years shows the 38-year-old investor as an active traveler, having visited Cuba, Mexico, Costa Rica, Taiwan, Thailand, Dubai and Slovenia, to name a few.
In recent months, under lockdown, the fintech entrepreneur-turned-investor has been more or less housebound, as his activities have mostly been virtual. This includes Twitter, where he tweets from his @pitdesi handle and regularly engages with other VCs or entrepreneurs on everything from San Francisco life, culture, start-ups, investing and more.
He’s also become an online star, enjoying more than 15 minutes of virtual fame. Through an acquaintance, he got a two-second role, disguised in a thick black mustache, for a video made by Justin Bieber and Ariana Grande for their song “Stuck with U.”
Of greater importance for the fintech start-up community, however, Mohnot also launched a new firm called Better Tomorrow Ventures, which he co-founded with Jacob Gibson, a co-founder of the personal finance company NerdWallet.
The two met at 500 Startups, where Mohnot led the firm’s fintech investments, beginning in 2015.
Mohnot wouldn’t discuss fundraising activities, but BTV is targeting to raise $60 million to make pre-seed and seed investments in fintech companies worldwide. A source familiar with the firm said BTV has raised much of the fund during the pandemic from a mix of LPs, including pensions, funds of funds, foundations, family offices and individuals.
To date, the firm has made six investments, four of which are disclosed.
Their interest in fintech comes as 2020 has in some ways been a banner year for the sector.
In January, Visa announced a $5.3 billion acquisition of venture-backed fintech company Plaid in a deal many expected to mark the start of an arms race for corporates seeking out VC-backed start-ups to acquire and add to their own financial offerings. In April, SoFi agreed to pay $1.2 billion to acquire the digital payments platform Galileo.
But activity in the fintech sector was reportedly down in Q1, according to CB Insights, which said that just $6.1 billion flowed through 404 worldwide fintech deals in the first quarter, the lowest deal count since Q1 2016 and the lowest funding total in three years. Similarly, PitchBook reported a similar pace in Q2 in Europe and North America.
However, one region seeing growth in fintech is Latin America, where Better Tomorrow Ventures has at least one deal. Fintech in the region reportedly has seen at least $8 billion in funding so far this year, according to 2020 Latam Fintech Report from KoreFusion. The report, which looked at Argentina, Brazil, Chile, Colombia and Mexico, is seen as showing the large growth potential of fintech in LatAm.
Mohnot talked with Venture Capital Journal recently about how he views the sector.
First off, what’s the story behind the name?
We invest for a better future, and fintech is a great way to improve people’s lives. We are based in San Francisco but believe that there is talent and unmet needs everywhere, so we don’t constrain ourselves geographically. I’m also on the investment committee for the Catalyst Fund, an initiative to support entrepreneurs building financial solutions for the underserved in India, Kenya, Mexico, Nigeria and South Africa.
Do you believe there are a lot of opportunities to invest in fintech, despite some research that shows it being down this year?
We see a lot of opportunities in fintech. Jake and I are taking a broad view of the sector, looking at everything fintech related, including payments and lending, and also vertical SaaS and marketplace businesses fit in our purview too. A lot of capital is going into fintech right now and companies are growing.
One of our deals is in Mexico and one is Israel. Most are in the states though, and we expect that to continue.
How are you investing worldwide when you’re not traveling?
Twitter over the last six months has brought in a lot of in-bound interest for us. Twitter is a great source of dealflow.
We also get great dealflow from downstream investors, our portfolio founders, and even LPs. We’re honestly drowning in great dealflow right now. There are a lot of great companies being built at this moment.
For those based in San Francisco, I’ve started to go on social distance walks with founders. In general, I’m spending a lot of time on Zoom. I have no issues meeting interesting founders online and making investments. For half of the investments we’ve made this year I’ve never met the founders.
For you personally, what’s been your track record in fintech?
I started at the nonprofit Kiva.org, then was a consultant at Boston Consulting Group working on financial services. I joined up with another BCG buddy to start FeeFighters, a payments start-up that enabled a reverse auction for credit card processing. FeeFighters raised a seed round of $1.6 million in 2009, ran for a couple of years, and was acquired by Groupon in 2012. At that point, I had capital and started angel investing. After that, I founded an auction company, called Innovative Auctions, in 2013. It was acquired in 2015.
At 500 Startups, you invested in seed. And now you and your partner are looking at leading pre-seed and seed deals. Are those stages poised for growth?
It will take a while for the portfolio to see results when you invest in seed. But the data on seed investing is wrong. Reports say seed is down, but that’s not what we’re seeing. Seed funding is up.
Overall, this is a crazy time in VC in general. There are more deals happening now than ever before. We thought initially coronavirus would depress valuations. But that’s not been the case. Everyone is extremely busy, and valuations are up.
We are founders ourselves and think that we can have the most impact at the seed stage. Seed is where founders need the most support, and we love being the first call.
We are most helpful in hiring, thinking through distribution, building company culture, getting strategic partnerships and raising your next round. We will be your biggest cheerleader but also promise to push you in the right places. We roll up our sleeves and try to be the biggest cheerleaders and most trusted partners for our companies.