Conversion Capital locks up largest ever fund to support early-stage fintech and infrastructure startups – TechCrunch

When Christian Lawless founded Convertible capital In 2015, fintech was just beginning to develop.

But Lawless, who founded the venture after taking leadership positions in capital markets at Lehman Brothers and Barclays, has a vision that the financial services infrastructure won’t be lumped together as companies Move critical operational infrastructure to the cloud. Lawless has raised $10 million and $20 million for Conversion Capital’s first and second funds, respectively.

Since founding Conversion Capital, the company has supported more than 60 startups, and among its portfolio are the likes of Ramp, Vesta, Figure, Braid, Blend, Wisetack and Booster Fuels, with others. It has seen 17 exits, mostly through M&A and one IPO (Mix).

In the years since Conversion was founded, fintech has essentially exploded – fueled by the accelerated digital transformation caused by the pandemic on the part of financial services companies around the world. The ruleless belief that infrastructure is the key to unlocking innovation in the space has been validated as infrastructure companies continue to be among the largest recipients of venture funding. in space, even during recessions.

Today, Convertible capital is announcing that it has raised $122 million for a third fund — more than six times the size of the previous fund — to support early-stage fintech and infrastructure startups. Lawless said he and his partners, Blend co-founders Eugene Marinelli and Erin Collard, planned to raise $100 million and hit that goal in the fourth quarter of last year. The company then raised another $22 million in the first quarter of 2022. It now has $254 million in assets under management.

Planned conversion back 25 to 30 fintech companies from its latest fund, spend at least 30% on further investments. It will focus on startups that are building software, cloud infrastructure, and data technology. Up to now, tHis firm has already begun deploying capital from the new fund across the fintech landscape and into nearby industries that it believes are “undergoing structural transformation.”

Convert will roll out $500,000 to $5 million in initial checks into pre-seed through Series A companies, with a “founder-led team of engineers.” In realityLawless said Conversion is betting on a trend he doubts will develop – engineers from privatized companies leaving to start their own companies.

In that frantic time of 2021, Series A became too expensive for Conversion to “work into,” Lawless noted, but he thinks “that’s going to be reset now.”

Meanwhile, Switch is as emphatic about what it won’t invest in as what it will do.

Lawless told TechCrunch: “We’ve never invested in companies with balance sheet risk, and so you won’t see us investing in a lending company. “For example, we avoided the direct peer-to-peer lending craze in 2017. We also avoided a lot of mortgage lenders, and instead chose to invest in picks and shovels, and the main one. actual core technology.”

In addition, notably, Despite the fact Lawless was born to a Bolivian mother and an Irish father, the investor will not deploy capital in LatAm and most of Europe where he believes a deep knowledge of the region is required. local currency and policies to do so effectively. Instead of, According to Lawless, the transformation is limiting its investments to US and London-based companies that it believes “could benefit from macro fluctuations and global dislocations”.

“Our experience motivates us to firmly believe that the United States will remain at the center of innovation. He said. “We still think that if the US were a startup, it would be one of the greatest startup nations in the world, and we want to invest in the ecosystem built and born out of. stable policies, stable politics and stable economy.”

Especially, Conversion is working under the premise The relaunch of supply chains and manufacturing presents a “huge opportunity” for infrastructure technologies, especially considering the fact that highly regulated industries – such as financial services – can now build in the cloud, not just build on-premises and move to the cloud.

Over the past year, Conversion has proceeded cautiously as many other VCs continue to invest.

“One thing that I always consider is that you might like to raise money in a bull market and then deploy it in a bear market,” he told TechCrunch. “We really didn’t allocate a lot of capital last year, because the market seemed to overheat and everything seemed to be heading for a recession or some kind of correction.”

As such, Lawless added, Conversion hasn’t allocated much capital in 2021 beyond “a handful” of investments in companies.

“So we still have a big chunk of that capital, and now we’re pretty excited to start actually rolling it out,” he told TechCrunch.

“I don’t want to say that we are jumping on anyone’s grave. That’s not the point, but as an investor, there’s a lot of global macroeconomic issues going on… and we think fintech can help solve all of these problems,” he said. Lawless said.

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