Exclusive: Financial Venture Studio gets $40M for second fund

Financial Venture Studio is gearing up to invest in more pre-seed and seed investments. The 4-year-old venture capital firm has raised $40 million for its second early-stage fund focused on the fintech industry, the firm tells Axios exclusively.

Why it matters: Founders even in the pre-seed and seed stage are beginning to budge and take lower valuations amid the tech stock rout, says managing partner Ryan Falvey — giving funds like Financial Venture Studio a glimpse of a less expensive environment.

Zooming in: "We've seen the earliest of the early stage start to correct this summer," Falvey says. "What we're seeing now is kind of reverting back to where we were in 2019."

• In 2021, for their first check, companies typically raised $5 million to $6 million at a mid-$20 million valuation. Now it's more common to see those checks at $2 million to $3 million with a valuation in the low teens, he says.

Context: Investors poured about $535.3 million into pre-seed and seed-stage fintech deals in the second quarter of the year, down 7.3% from the previous quarter, according to Dealroom.co data. By comparison, fintech funding in total slid 36.3% sequentially during the quarter.

Details: Financial Venture Studios aims to be the first institutional investor in fintech companies, cutting on average $250,000 for the initial check into each company.

• FVS generally does not take board seats but does take an active role as a kind of advisor in the business. FVS, for example, may introduce the startup to later-stage investors that can provide capital years down the road.

• It has already deployed about 15% of the second fund, and is expecting to invest in a total of about 35 or so companies through the vehicle. It has also made investments in crypto companies.

Of note: Founded in 2018 by Falvey and Tyler Griffin, FVS raised about $13.4 million for its first fund.

• That fund is up roughly four times its initial capital (largely unrealized gains), says Falvey, with the sale of Harvest to Acorns being its largest exit.
• Other bets by the duo include Digit (which was acquired by Opportun), Dave, and Sheltr (bought by Hippo).