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Exclusive: Fintech-focused Canapi Ventures raises $750M

Illustration of a blank check with a magnifying glass hovering over it, revealing a one hundred dollar bill within the glass

Illustration: Annelise Capossela/Axios

Canapi Ventures, a fintech-focused firm with investments in Greenlight and Alloy, raised $750 million for its second set of funds.

Why it matters: The raise comes even as fintech valuations have been slashed to pieces.

Details: Dubbed Canapi Core Fund, the vehicle held its final close in September at about 15% more than its first fund.

  • Focused on companies that sell to businesses, Canapi invests across seed to growth and makes five to six deals a year on average.
  • The close comes as the firm has been quietly growing its geographic footprint beyond its headquarters in Washington D.C. In mid-November, it named Tom Davis as a general partner to open its first San Francisco-based office.

Between the lines: Canapi has a reputation for its ties within the traditional finance world, and it counts nine of the 25 largest banks by asset as its LPs.

  • Those ties are notable at a time when fintech startups are increasingly seeking to sell into banks rather than their more volatile fintech peers.
  • "The strategic LPs they bring to the table — which unlocks the ability to sell into banks — is unmatched," says TTV Capital Partner Neil Kapur.
  • "I've seen them win deals as a result of those relationships," says Kapur. "Although they are 'emerging managers,' the folks around the table have been around the financial services industry for decades and have built some of the largest fintechs that people haven't heard of."

Flashback: Canapi inherited much of its DNA from Live Oak Bancshares (NYSE: LOB), a Wilmington, North Carolina-based bank valued at $1.6 billion.

  • An LP in both of Canapi's funds, Live Oak had its start banking veterinarians in 2008 but soon established fintech chops.
  • In 2020, banking software company nCino went public after spinning out from Live Oak. That company is now worth $3.2 billion on the Nasdaq.
  • Canapi Managing Partner Chip Mahan, who co-founded nCino, is also chairman and CEO at Live Oak Bank. Canapi managing partner Gene Ludwig was comptroller of the currency in the Clinton administration.

Of note: Canapi also invests in software companies that are not traditionally considered fintech but do sell into financial services.

The intrigue: Canapi has not been immune from the fintech downturn.

  • One of two exits, insurtech Blend was valued at nearly $4 billion in its IPO but is now treading around $337 million.

What they're saying: "It's not over yet," says Canapi general partner Neil Underwood, attributing the stock's downturn to the slowdown in the mortgage sector. "We have high hopes that given the quality of the software and the customer relationships, we'll get back into the black."

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