Better Tomorrow Ventures Reaffirms Commitment to Fintech with $140M Fundraise
Better Tomorrow Ventures (BTV), led by co-founder and general partner Sheel Mohnot, has successfully closed its third fund at $140 million, signaling sustained confidence in the fintech sector’s growth potential. This nearly matches their second fund of $150 million, raised during the peak of the zero interest-rate policy (ZIRP) era in early 2022. Mohnot, a former general partner at 500 Startups, emphasized the vast scope for digitization within financial services, which still constitutes approximately 20% of global GDP but remains insufficiently digitized. “The massive digitization opportunity is still ahead of us,” he stated.Strategic Fund Size Reflects Market Maturity and Focus
Contrasting with the exuberant market conditions of 2021, where follow-on rounds often came at inflated valuations, BTV intentionally planned a more measured fund size this cycle. Mohnot explained, “In 2021, things went super overboard. Every company we invested in immediately raised a follow-on round at a crazy price, and that was probably bad.” While the firm raised a $75 million opportunity fund alongside its second fund in 2022, it has yet to deploy this capital, viewing it as a strategic reserve for late-stage opportunities as fintech IPOs materialize from companies like Chime, Klarna, Navan, and Wealthfront.Investment Focus: AI-Powered Disruption Across Financial Services
BTV’s investment thesis centers on leveraging artificial intelligence to automate labor-intensive financial services, including underwriting, compliance, fraud detection, and customer support. Mohnot highlighted the acute shortage of accountants and the opportunity AI presents to transform accounting workflows.- Basis: Recently raised $34 million Series A led by Khosla Ventures, focused on accounting automation.
- Layer: Embedded accounting platform targeting small and medium businesses.
- InScope: Automates drafting of audited financial statements.
- Coast: Payments platform tailored for fleet and truck drivers.
- Relay: Online banking and cash management for small businesses.
- Unit: Banking-as-a-service startup valued at $1.2 billion.
Market Impact and Outlook
Better Tomorrow Ventures’ continued investment in fintech underscores the sector’s resilience and innovation capacity despite cyclical market adjustments. Their focus on AI-driven automation addresses critical pain points in financial services, offering scalable solutions that could enhance efficiency and reduce costs industry-wide.“Financial Services is very labor-intensive. There’s underwriting, compliance, fraud detection, customer support. AI can do all that at a lower cost.” – Sheel Mohnot, Co-founder, Better Tomorrow VenturesFinOracleAI — Market View
Better Tomorrow Ventures’ $140 million fundraise reflects a pragmatic yet optimistic stance on fintech’s long-term potential amid a maturing market. The firm’s emphasis on AI-powered automation aligns with broader industry trends towards efficiency and digital transformation.- Opportunities: AI-driven automation in accounting, underwriting, and compliance can reduce operational costs and address talent shortages.
- Risks: Market volatility and valuation corrections may delay exits and impact late-stage funding enthusiasm.
- Strategic Advantage: Holding a $75 million opportunity fund positions BTV to capitalize on upcoming IPOs and late-stage fintech growth.
- Portfolio Diversity: Investments span payments, banking-as-a-service, and embedded finance, mitigating sector-specific risks.
Impact: Better Tomorrow Ventures’ fundraising and investment strategy reinforce fintech’s evolving landscape, highlighting AI’s critical role in transforming financial services and sustaining investor interest despite broader market headwinds.
