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FTV raises $2.3B to invest in fintechs

Mar 24, 2022
Illustration of stacks of money progressively getting larger with the last one so tall that it goes off screen.

Illustration: Aïda Amer/Axios

Growth equity firm FTV Capital raised $2.3 billion in its seventh fund to focus on enterprise and fintech investments.

Why it matters: While many VC firms are out unicorn hunting, FTV has a somewhat contrarian take — betting big and early on capital-efficient companies with solid fundamentals.

  • "I think we've always been a relatively disciplined investor. We're not just piling into later-stage unicorn deals where they're trading at a crazy valuation," managing partner Brad Bernstein tells Ryan.
  • "We're much more focused on partnering with founders that are grounded in more traditional metrics where we can build value together," he says.

Details: FTV VII is a big step up from the $1.1 billion fund the firm raised in late 2019.

  • The firm typically makes investments between $30 million and $200 million and seeks to take either a controlling or significant minority stake in its portfolio companies.
  • "The vast majority of our investments are bootstrapped by founders, where we are either the first institutional investor or the lead investor," Bernstein says.
  • So far, the approach seems to be working: Bloomberg reports the two prior funds, FTV VI and FTV V, have posted net internal rates of return of about 56% and 49%, respectively.

Context: At a time when many high-growth, high-burn startups face the challenge of growing into their valuations, FTV focuses on businesses that are cash flow positive or have controllable burn rates.

  • "I think all investors have to rethink what the next decade is going to be like versus the last," Bernstein says.
  • He notes the market is changing after 10 years of quantitative easing and some of the lowest interest rates we've ever seen.
  • "With that new backdrop, you have to be rethinking valuations and what lies ahead," he added.

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