FintekNews is pleased to offer our weekly feature column "3 Questions". Each week, we feature a thought leader within a unique sector of fintech and ask them to answer just 3 questions for our audience in their vernacular. This week we are pleased to offer our first VC interview, and introduce you to Luke Timberlake of Fintech Ventures Fund, an investment firm focusing on early and growth stage financial technology companies.
Name: Lucas Timberlake Title: Director Firm: Fintech Ventures Fund Website: www.fintechv.com
What does your firm do/offer within the fintech sector?
Fintech Ventures is an $100 million investment firm based out of Atlanta, GA, which was founded in late 2015. We are primarily focused on making early-stage investments in the non-banking lending and payment spaces, but have a flexible mandate that allows us to make later stage growth equity and private equity investments in financial technology ventures. We like to get our hands dirty and take an active operating-partner approach to provide the support our founders and management teams need to grow their businesses. Since launching our Fund, we have made 4 investments, 2 within the real estate crowdfunding space and 2 within the SMB lending arena.
What area/s of fintech do you believe will grow the most in the coming 5 years?
I believe that companies, which sell B2Ba (“business-to-bank”) and help banks improve their processes and expand their product offerings, will experience the most growth over the next 5-10 years. For instance, we are just noticing the beginning of this trend in the lending space, where there are a variety of startups looking to provide solutions to assist community banks with their application and loan originations processes, which allows for the improved ability to cost-efficiently underwrite smaller loans more quickly than before and better compete with technology enabled alternative lenders in the space.
Since sales cycles are long for these products, and we are just beginning to see a new wave of early-stage entrants into this market over the last several years and increased receptivity by banks to leveraging new technologies. I think the growth cycle in this area of fintech is just beginning.
What are the biggest problems facing the fintech industry in the future?
It is no secret that the primary headwind facing the industry is regulation and uncertainty regarding future policy decisions. As one of your other “3 Questions” contributors mentioned previously, we are currently in the “gray zone”, when it comes to regulatory environment and fintech. It is unclear how government regulatory body future policy decisions will impact existing incumbents in the space. For instance, we are seeing this trend manifest itself within the SMB lending space, with federal regulators currently studying this market and determining whether they will increase their oversight of the sector. However it is still unclear what policy mandates, if any, come from this increased scrutiny and whether these regulators have the jurisdiction to step in and enact rule changes.
However, it is important to note that regulatory policy decisions are not always “bad” within fintech, as they can actually create new opportunities for startups to enter markets that have long been antiquated and opaque. We are seeing this happen with the CFPB and its recent scrutiny of payday/title lenders, which is creating a large potential opportunity for new technology-enabled entrants to serve this area of consumer credit.
Lucas is a Director with Fintech Ventures, an investment firm focusing on early and growth stage financial technology companies. Lucas splits his time between Atlanta and New York City, where he is an active member of the financial technology communities in both cities. He serves on the Board of Directors of Fund That Flip (an early stage real estate lending startup) and as a mentor/strategic advisor to a variety of early-stage financial technology and transportation startups.