TechCrunch - Sheel Mohnot says the fintech market is ‘hot again’
The podcast features Sheal Manat, founder of Better Tomorrow Ventures, discussing his journey from startup founder to fintech investor. He shares insights on the fintech industry's evolution, emphasizing the broadening definition of fintech to include vertical SaaS and B2B marketplaces. Manat highlights the importance of technology in addressing the shortage of accountants, with companies like Basis and Layer automating accounting tasks. He also discusses the role of AI in transforming underwriting and fraud detection processes. Manat's social media presence, particularly on Twitter, has unexpectedly aided his investment activities by attracting founders and facilitating deals. He recounts personal anecdotes, such as his Taco Bell metaverse wedding and appearance in a Justin Bieber video, illustrating the blend of personal branding and professional success. The episode concludes with a discussion on the future of fintech, noting a resurgence in interest and potential IPOs in the sector.
Key Points:
- Sheal Manat emphasizes the expanding definition of fintech, including vertical SaaS and B2B marketplaces.
- Technology is crucial in addressing the accountant shortage, with AI automating many tasks.
- Social media presence can significantly impact business opportunities, as seen with Manat's Twitter influence.
- AI is transforming underwriting and fraud detection, making processes more efficient and cost-effective.
- The fintech sector is experiencing renewed interest, with potential IPOs and increased investor activity.
Details:
1. 🎤 Introduction to Equity Podcast
- Presented by Invest Puerto Rico, suggesting a focus on investment opportunities in Puerto Rico.
- The introduction sets the stage for discussions on economic growth and strategic investment in the region.
- Highlights the potential of Puerto Rico as a financial hub due to its unique tax incentives and growing industries.
2. 🎙️ Welcome Back, Maryann Aavo's Return
- Maryann Aavo is returning as the host of TechCrunch's flagship podcast, Equity, which focuses on startup business trends.
- The podcast episode format includes bringing on industry experts to discuss and analyze significant trends in the tech world.
- Maryann Aavo previously contributed significantly to the podcast's growth and audience engagement, making her return highly anticipated.
- Equity aims to provide listeners with in-depth discussions on the latest developments in the startup ecosystem, offering insights from experienced industry figures.
3. 💼 Sheal Manat: Entrepreneurial Journey and Investments
- Sheal Manat founded and sold a company called Ff Fighters to Groupon in 2012 after approximately three years of operation.
- After the sale, Sheal began investing his own capital and started another company, Innovative Auctions, before moving into full-time investing.
- Sheal co-founded Better Tomorrow Ventures at the end of 2019, marking over five years of operation.
- Throughout his career, Sheal has invested in over 100 deals, although he did not provide a specific number.
- He has focused on fintech investments, supporting early-stage companies with a strategic emphasis on innovation and market disruption.
4. 📲 Mastering Social Media: Sheal's Unique Approach
- Better Ventures considers vertical SaaS and B2B marketplaces as fintech, citing that over 80% of revenues in companies like Shopify and Toast come from financial services.
- The Mint accelerator has successfully completed three cohorts in San Francisco and is starting its fourth in New York City, working with 6-8 companies in person, providing early-stage support.
- Sheal's social media strategy has resulted in an impressive following of over 151,000 followers.
- Sheal employs targeted content and engagement strategies that have effectively increased social media presence and follower count.
- The Mint accelerator's success in nurturing early-stage companies suggests a robust model for business growth and development.
5. 🌮 Metaverse Wedding: Taco Bell Adventure
- The individual's social media presence grew significantly during the pandemic, initially through Clubhouse, where they accumulated approximately 3.3 million followers.
- Transitioning to Twitter was a strategic move that leveraged the need for written communication, enhancing audience engagement.
- The passion for writing and sharing ideas on Twitter further expanded their follower base and engagement.
- This social media growth played a crucial role in facilitating a unique metaverse wedding adventure with Taco Bell, highlighting the integration of digital presence and personal life events.
6. 🎬 From Zoom Bachelor to Justin Bieber's Video
- A meme involving the speaker's wife received 250,000 likes, showcasing the potential for viral content through relatable and humorous situations.
- The speaker discusses a video of a man slicing the back wheel of his bicycle into two functioning halves, illustrating creativity and innovation in unexpected places.
- These examples highlight the power of social media to amplify unique and captivating stories, quickly garnering widespread attention and engagement.
7. 💡 Leveraging Social Media for Investment Success
- Social media can be a powerful tool for gaining attention and engagement, as demonstrated by the widespread reaction to a humorous analogy about web three founders.
- Personal stories and unique events, such as a wedding in the metaverse sponsored by a popular brand like Taco Bell, can capture public interest and media coverage.
- Participation in brand-sponsored contests can be an innovative way to leverage personal and social media presence, as seen with the Taco Bell metaverse wedding contest.
- Creating engaging content, such as surprise engagement stories shared on platforms like Twitter, can lead to viral moments and further opportunities.
- Applying for contests may involve simple, creative submissions like a two-minute video, which can be an effective strategy for standing out and winning.
8. 🔍 The Taco Bell Wedding Experience
- A couple spent only half an hour creating a video submission for a Taco Bell wedding contest, demonstrating the low barrier to entry and potential for high reward.
- Initially, the couple was hesitant about accepting the opportunity, highlighting the importance of personal alignment and strategic fit in decision-making processes.
- The personalized experience offered by Taco Bell, including a customized wedding and inclusion in the 'Taco Bell family,' played a critical role in persuading the couple to participate, emphasizing the value of personalization in customer engagement strategies.
- The promise of a celebrity appearance at their wedding served as a unique selling point, illustrating Taco Bell's commitment to crafting memorable and distinctive experiences for participants.
- This case underscores the effectiveness of combining low-effort entry requirements with high-value personalized experiences to engage and motivate participants.
9. 📈 Better Tomorrow Ventures: Goals and Achievements
- Social media presence has helped attract founders and win deals, even if not the primary goal of posting.
- Engagement from a viral tweet led to an immediate response from India Gold, a company that Better Tomorrow Ventures later invested in.
- Portfolio companies have reported benefits from inbound customers who discovered them through social media.
- Top recruits have joined companies after learning about them via Twitter, highlighting the platform's value in talent acquisition.
10. ⚙️ Fintech Innovations: AI and Accounting
- Better Tomorrow Ventures leverages its 150,000-follower base to attract thousands of applicants, selecting only six or seven companies to ensure capturing top opportunities, demonstrating a highly selective investment strategy.
- The firm is investing from its second fund and planning a third, indicating a robust and expanding investment base.
- Recent and anticipated exits highlight the firm's strategic positioning in the growing fintech market.
- A shortage of accountants in the U.S. is being tackled through technology and AI, with fewer graduates and CPAs entering the field.
- AI-driven companies like Basis, Layer, and Inscope are transforming traditional accounting by automating tasks such as junior accounting work, bookkeeping, and auditing.
- Basis sells AI solutions to large accounting firms to perform tasks typically done by junior accountants, enhancing operational efficiency.
- Layer partners with vertical SaaS companies to automate accounting and bookkeeping, streamlining financial processes.
- Inscope automates audit processes for late-stage private companies, improving accuracy and efficiency in financial audits.
11. 🔍 AI's Role in Accounting and Business Efficiency
11.1. AI Companies Replacing Human Tasks
11.2. Accounting Firm Challenges
11.3. Technology vs. Traditional Accounting Firms
12. 🤖 The Deep Seek Phenomenon: AI Cost Dynamics
- Deep Seek, developed at a low cost and open source, challenges the AI landscape by offering capabilities matching previous OpenAI models, though not the newest.
- AI inference modeling costs are predicted to decrease significantly, enhancing AI companies' profit margins.
- Deep Seek's entry prompts a price war at the foundational model level, driving cost reductions in AI.
- The training cost for Deep Seek's V3 model is $6 million, modest compared to OpenAI, but this is only part of total expenses.
- Concerns exist about Deep Seek's hardware source, with indications of circumventing export restrictions through Singapore.
- There is a possibility that Deep Seek uses distillation techniques from OpenAI and Claude to reduce development costs artificially.
- The presence of Deep Seek accelerates competitive dynamics in AI, potentially altering the global market by lowering barriers to entry for new players.
13. 🌐 Navigating AI Hype in Fintech
13.1. AI Hype in Fintech Pitches
13.2. Effective AI Application in Fintech
13.3. Challenges in the Fintech Sector
13.4. Fintech Market Outlook
14. 🔮 Future of Fintech: Opportunities and Challenges
- A record number of financings occurred in January for the fintech portfolio, with eight companies successfully raising funds, highlighting a significant uptick in investor confidence and interest.
- Each company that raised funds was backed by reputable investors, indicating strong validation and trust in their business models and the fintech sector's potential.
- The increased investor interest is further evidenced by the speaker's personal experience of heightened communication and inquiries from investors, demonstrating a positive shift in fintech investment dynamics.