Fintech Venture Studio Closes Debut Fund - Building on Investment Success

Fintech has experienced significant growth in recent years. Previously considered a challenging investment area due to its regulatory environment and established players, fintech is now a highly sought-after category, supported by numerous substantial exits, including those of Plaid, CreditKarma, and Galileo, within the last year.

However, developing fintech applications and systems still demands considerable expertise. The existing regulations can create initial hurdles for fintech startups, and founders may find it difficult to establish relationships with traditional financial institutions.

Financial Venture Studio aims to connect founders with the resources needed to successfully launch a fintech startup into the marketplace.

Although a new firm, it builds upon a strong foundation as a prominent early investor in the financial services sector.

Ryan Falvey and Tyler Griffin established the firm in 2018. They initially collaborated at the Financial Solutions Lab (FSL), a startup incubator created by the non-profit Center for Financial Services Innovation and backed by JPMorgan Chase. Falvey launched the lab to broaden the reach of digital financial services, and it subsequently invested in companies such as Digit, Nova Credit, Even, Dave, and Point.

Falvey and Griffin transitioned from the program to create their own venture firm, focused on replicating the success of connecting founders and streamlining their progress through the complexities of the fintech landscape. Falvey’s professional background includes experience in banking at Silicon Valley Bank, while Griffin previously co-founded Prism Money before joining FSL and ultimately founding the Financial Venture Studio.

The firm recently announced the completion of its inaugural $13 million fund, with contributions from a diverse group of financial institutions.

“We even considered naming it ‘Too Early Capital’ because we encounter companies at a stage where they have a promising concept and initial product development,” Falvey explained. “When a team is pursuing an idea and we leverage our deep understanding of fintech, we can offer a range of resources earlier in their development than is typical, potentially accelerating their growth.”

Falvey emphasized that fintech, in contrast to some other sectors, necessitates specialized investor expertise from the outset to be truly effective. “The challenge remains navigating the regulations and operating within the United States, a complex and costly market,” he stated. “Our preferred approach is to invest at the pre-seed stage and support companies through to their Series A funding round.”

Fintech is the primary focus, and the team is open to exploring a wide range of opportunities within that field. When asked about cryptocurrencies and blockchain, Falvey expressed strong interest, stating, “we are eager to invest in a crypto-focused company.”

The firm primarily targets startups operating in the U.S. market, including international companies seeking to enter or expand within the country. Falvey indicated that the average initial investment is $100,000, and that “we aim to provide a level of support that exceeds standard practices.” The firm frequently participates in subsequent funding rounds as startups achieve scale and demonstrate market success.

Considering the existing investment activity in the space, I inquired about Falvey’s perspective on current opportunities in fintech. He responded, “Many institutions are beginning to rethink, particularly in the wake of COVID-19, how they develop products, implement them, and support their personnel, which will generate new opportunities for fintech providers.”

The conversation also touched upon diversity, a recognized challenge within the broader tech industry, but particularly pronounced in financial services. Falvey noted that many financial services companies quickly realize their customer base is far more diverse than their internal teams. “The user base is typically more female, more representative of diverse ethnic backgrounds, and less concentrated in coastal areas than is common in the technology sector,” he said. He added that startups often recognize the importance of diversity early on to improve communication with a wider range of customers, and that LPs consistently raised the topic of diversity.

To date, the firm has made 18 early-stage investments across three “cohorts,” and has also made later-stage investments in several of its former startups from the Financial Solutions Lab. Initial investments include Everlance, Anvil, Roger, and HoneyBee.