Despite a cooling venture market, Better Tomorrow Ventures (BTV) is keeping its faith in fintech — raising a $140 million third fund to back early-stage startups modernizing financial services.
Co-founded by Sheel Mohnot, a former partner at 500 Startups, and Jake Gibson, co-founder of NerdWallet, the San Francisco–based VC firm has built a reputation as one of fintech’s most active early-stage investors. The latest fund is nearly on par with its $150 million second fund raised in 2022, signaling steady conviction in the sector even after the market hype of the ZIRP-era.
Betting on the Digitization of Finance
Mohnot argues that fintech’s opportunity remains massive: “Finance accounts for about 20% of global GDP, yet much of it still isn’t digital,” he explained. While venture enthusiasm has cooled compared to 2021’s frenzy, he sees this as a healthier environment for long-term investing.
During the boom, startups were raising quick follow-on rounds at inflated valuations, a trend Mohnot admits was “probably bad” for the ecosystem. The new fund, sized slightly smaller by design, positions BTV to remain disciplined while backing founders tackling systemic inefficiencies in financial services.
AI and Accounting as Key Frontiers
One of BTV’s strongest bets is in accounting tech, a field Mohnot describes as overdue for disruption. “There’s a massive shortage of accountants globally. Firms are literally turning away business. AI is the perfect tool to fill that gap,” he said.
The firm has already backed three accounting-focused startups:
- Basis – raised a $34M Series A led by Khosla Ventures.
- Layer – an embedded accounting platform for SMBs.
- InScope – which automates the drafting of audited financial statements.
Beyond accounting, Mohnot sees AI transforming multiple pain points in financial services — from underwriting and compliance to fraud detection and customer support.
A Growing Portfolio of Fintech Builders
BTV’s portfolio extends across the financial services spectrum. Notable companies include:
- Coast, a payments platform for fleet operators and truck drivers.
- Unit, a banking-as-a-service provider most recently valued at $1.2B.
- Relay, an online banking and cash management platform for SMBs.
With Fund III, BTV plans to write checks between $500K and $3.5M, targeting 30–35 startups at the pre-seed and seed stages.
Why This Matters
Fintech’s next chapter may look different from the hypergrowth days of 2021, but BTV believes it’s entering a more sustainable era. With IPO candidates like Chime, Klarna, Navan, and Wealthfront waiting in the wings, momentum could return to later-stage markets — creating ripple effects for early-stage investors like BTV.
As Mohnot put it, “The massive digitization opportunity is still ahead of us.”