After working together for nearly one decade, three former managing directors of Amex Ventures in early 2022 branched out to form their own fintech-focused venture firm, Vesey Ventures. The trio had made early investments in more than 50 fintech companies, including the likes of Stripe, Plaid, Melio and Trulioo. During that time, they also helped engineer over 100 partnerships between startups and financial services institutions.
Their goal was to take that 10 years of experience investing through the venture capital arm of one of the world’s largest credit card companies, and apply it firsthand to new early-stage investments — but with a twist. The firm says its intent is to go beyond term sheets to issuing bespoke “Strategy Sheets,” which outline how Vesey Ventures aims to leverage its network “to act as a company’s first business development team.” In other words, it wants to invest in early-stage fintech and enabling technology companies “where opportunities for early partnerships with financial incumbents exist.”
And today, the firm — formed by founding partners and friends Dana Eli-Lorch, Lindsay Fitzgerald and Julia Huang, who all left AMEX Ventures at the same time in late 2021 — has announced the closure of its $78 million debut fund. They named the firm Vesey Ventures after the street where American Express has its headquarters in New York. (They declined to say whether Amex is a limited partner in the new fund.)
The feat is particularly impressive considering that, according to PitchBook data recently cited by The Information, “female-led venture firms in the U.S. have raised only $74 million this year.” This means that in closing its debut fund, Vesey has effectively raised more than all female-led venture firms in the U.S. combined and more than doubled the amount raised by female-led VC firms so far in 2023.
Vesey’s self-described mission is to back companies “transforming financial services” at the seed to Series B stages. It plans to invest $1.5 million to $3 million as initial checks, and larger amounts for follow-ons. Based in the United States and Israel, the fund has so far backed five startups, including Coast, Cyrus, Grain, Equi and Proper.
Vesey defines fintech in its broadest sense — meaning that it invests outside of traditional categories of financial services such as consumer and B2B, said Eli-Lorch in an exclusive interview with TechCrunch. It also looks at vertical software, embedded fintech, the future of commerce and the infrastructure layer — basically, cybersecurity, risk and compliance, or, as Eli-Lorch describes it, “all that back office operations of financial services.”
“Another lens that we take is basically any type of technology software innovation that sells into financial services, meaning either financial institutions or fintechs,” she said.
Bridging a gap
The founding partners all agreed on one thing when starting the new firm: that it was clear that startups with better business development strategies had better outcomes.
“And that’s ultimately the insight that we built a thesis on,” said Fitzgerald. “In this industry, this development is not a ‘nice to have,’ it is a ‘need to have.’ ”
“The traditional corporate VC model can be limiting, though, so we saw an opportunity,” she added. “We took the best of what was clearly working — business development, our team, our network — including other VCs and angels, and expanded on it…to sort of bridge the gap between companies in need of new technologies and the startups building those new technologies.”
Today, the partners recognize an interesting phenomenon taking place — senior execs of what they describe as “gen one” fintech startups. And, despite the recent volatility the fintech space has seen in the past couple of years (funding was down significantly in 2022 compared to the heyday of 2021), Vesey is naturally “long-term bullish” on fintech.
“You only need to look at the past quarter of volatility and upheaval in the financial services industry to really reference that there are many, many problems that still need to be solved,” Huang told TechCrunch. “Having said that, things are cyclical…it’s like when the tide goes out, you see who’s sort of naked right? And for us, that is the infrastructure layer…that we always help our companies build and reinforce so that they can become trusted financial institutions for the long term. That has become a really important pillar, and now it’s back in vogue.”
Huang also acknowledges that in 2021, the trio stepped back from investing “because it was getting way too frothy.”
“Every company was sort of a ‘me too company,’ she recalls. “So we decided to take a step back and think about our value proposition and what has legs and what doesn’t.”
Vesey intentionally chose to be on the ground in Israel (Eli-Lorch is based there), a market the partners view as being home to one of the world’s fastest growing tech hubs, with many companies focused on fintech, enterprise software, cybersecurity and data. It aims to help startups there partner, expand and commercialize in the U.S.
The new firm is staying mum about its LPs, saying only they include seven “very prominent financial institutions,” as well as founders and executives from financial incumbents, family offices and institutional investors.
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Vesey Ventures closes on $78M debut fund to back early-stage fintech startups by Mary Ann Azevedo originally published on TechCrunch