Feb 15, 2022 - Economy

Better Tomorrow Ventures raises $150 million for second seed fund

Illustration of a phone dispensing money.

Illustration: Annelise Capossela/Axios

Better Tomorrow Ventures, a fintech-focused early stage venture firm headed by NerdWallet co-founder Jake Gibson and ex-500 Startups partner Sheel Mohnot, has raised $150 million for a sophomore fund, and $75 million for an opportunity fund.

Why it matters: Fintech has been a hot sector over the past couple of years, with record venture dollars invested and several blockbuster exits.

The big picture: For fintech investors like Better Tomorrow, there's now a lot more startups to back, but also a lot more competitors vying for those deals.

  • "Valuations are up like 20% since we started investing, so we need more capital to get same ownership size," says Mohnot of raising a new fund that's twice as big as the first one in 2020.
  • And even if the firm is still able to win deals without offering the highest valuation, it undeniably has to pay more now, he adds.

Yes, but: A number of public fintech companies took a hit in late 2021 amid a broader market selloff, which has had a ripple effect down to the startup market.

  • Seed-stage insurance startups, for example, are getting less interest from investors who have written off the category because of the performance of public comps like Metromile, Root, and Lemonade, notes Mohnot. (Notably, Kin Insurance, in which Mohnot invested prior to Better Tomorrow, opted for a private round instead of going through its planned SPAC merger last month, as Axios reported.)
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