Fiat Ventures, with $25M for first fund, brings ‘insider’ approach to investing in early-stage fintechs

Fiat Ventures general partners Drew Glover and Alex Harris, along with managing partner Marcos Fernandez, are out to find and invest in fintech’s next generation of startups, and are leveraging their unconventional backgrounds to find equally unconventional founders.

The early-stage VC firm started in 2021 is now armed with $25 million in capital commitments to close its first fund; the partners are targeting financial services and financial technology startups building for the 90% of Americans who don’t already have enough savings or don’t know how to start managing what they do have.

And they don’t just want to invest capital. The firm has taken a unique approach in the way it works with its companies, coming in initially as more of a marketing and strategic partnership. This came about when the partners started Fiat. They didn’t have capital to invest right away, so they asked founders for advisory shares and the right to invest eventually, Glover said.

As such, Fiat focuses on ownership percentage, taking about 2% to 2.5% in companies the firm invests in, Glover told TechCrunch. That might look like a $100,000 to $500,000 check with available funds to double and triple down on some of its more successful companies.

That initial approach turned into half of a business with partnerships, like affiliates, strategics and influencers, and the other half being everything that touches performance and growth.

“Think of us as basically a turnkey fractional CMO where we can walk in and help with strategy and execution,” Glover added. “Don’t hire a $400,000 a year CMO, but let us come in with our team of former VPs and CMOs and work with you to build out your growth ecosystem.”

Fernandez told TechCrunch that he believes this approach is one of Fiat’s “greatest strengths and advantages,” and something that typical venture capital firms hire an operating team to do when they reach their third, fourth or fifth fund, not the first fund as Fiat has been able to do.

The partners have formed this type of relationship with more than 100 companies so far, working with them for a minimum of three months. In 2021 when they established a more formal venture business, they say it gave them unique insight into the companies — the good, the bad and the ugly — which helped them pinpoint where best to deploy the capital, Harris said.

“Two out of the three of our investments have been from these relationships,” Fernandez added. “It’s given us the extra due diligence to see if they have product market fit and to see founder dynamics, for example if they can raise funding, recruit and know where their gaps are. You can’t get that from getting on calls or data rooms.”

Investors into the new fund include Invesco Private Capital, which anchored the fund, DAHG Capital Partners, Joint Effects LLC, Full Spectrum Capital, Temerity Capital Partners, Now Investments, Mountaineer Capital, Permit Ventures and a group of fintech founders, including Bestow’s Jonathan Abelmann, Chime’s Kyle Daley and Mulberry’s Chinedu Eleanya.

Some notable investments among the 22 companies in Fiat’s portfolio so far include teen-focused banking app Copper, which raised $29 million in April; insurance company Breeze, which grabbed $10 million last year; and Sleek, a one-click checkout company that bagged $1.7 million earlier this year.

In addition, the Fiat team itself has diverse backgrounds, and the partners said it was equally important to show that in the companies they invest in as well. Sixty-seven percent of investments are in underrepresented founders, 30% are female founders and 40% are minority led.

“It really comes down to our backgrounds and that’s what we cherish the most,” Glover said. “Marcos is Hispanic-American, I’m African-American and Alex is 100% our people and also Jewish.”

He went on to describe growing up in East Oakland with exposure to all forms of socioeconomic classes, and with parents who were deeply ingrained in civic action. Meanwhile, Marcus grew up in Texas and in a similar type of environment, while Alex grew up in Stockton.

“We all grew up with this mindset of investing in the best ideas that are making the greatest impact,” Glover added. “The networks that we grew up in bred other networks and gives us the access to see some of the best underrepresented founders and ideas that are making the largest impact.”