BTV Bags $140M Fund, Proving Fintech Is Far From Dead

San Francisco-based venture capital firm Better Tomorrow Ventures (BTV) has secured $140 million for its third fund to target early-stage fintech startups, betting on a massive wave of financial digitization and AI integration despite a broader market slowdown.

Why Fintech Remains an Untapped Goldmine

While some critics claim investing in fintech has lost its luster, Sheel Mohnot, co-founder and general partner of Better Tomorrow Ventures, strongly disagrees. He points out that financial services represent roughly 20% of global GDP, yet a massive portion of this sector remains stubbornly manual and analogue.

Led by Mohnot, a former general partner at 500 Startups, and NerdWallet co-founder Jake Gibson, BTV is positioned to capture this ongoing transition. The firm’s limited partners share this vision, agreeing that the most significant digitization opportunities in global finance still lie ahead.

A Leaner Capital Strategy for a Post-ZIRP Market

BTV’s newly closed $140 million third fund is slightly smaller than its $150 million second fund, which was raised in early 2022 during the peak of the zero-interest-rate policy (ZIRP) era. According to Mohnot, downsizing the fund was a deliberate and strategic move. The hyper-inflated valuations of 2021 led to unsustainable follow-on rounds, whereas today’s tamer market allows BTV to back high-performing startups with less capital.

The Impending Late-Stage Fintech IPO Wave

In addition to the new fund, BTV still holds an untapped $75 million opportunity fund from its 2022 vintage. This capital dry powder could soon find a home as late-stage investor enthusiasm returns, driven by anticipated IPOs from major fintech players like Chime, Klarna, Navan, and Wealthfront.

AI and the Automation of Financial Services

At the early stage, BTV is heavily focused on sectors ripe for disruption, particularly accounting. A severe shortage of human accountants has forced firms to turn away business, creating a perfect entry point for artificial intelligence automation.

BTV has already backed three promising startups in this niche: Basis, which recently secured a $34 million Series A led by Khosla Ventures; Layer, an embedded accounting platform tailored for small and medium-sized businesses; and InScope, an automated platform designed to streamline audited financial statement drafting.

Broad AI Applications and Portfolio Highlights

Beyond accounting, Mohnot sees AI streamlining highly labor-intensive financial operations, including underwriting, compliance, fraud detection, and customer support. BTV’s diverse portfolio already features high-growth companies like Coast, a specialized payments platform for fleet drivers; Relay, an online banking solution for small businesses; and Unit, a prominent banking-as-a-service platform valued at $1.2 billion.

With Fund III, BTV plans to write checks between $500,000 and $3.5 million, targeting 30 to 35 early-stage companies poised to reshape the financial landscape.