A look at how Conversion Capital plans to support fintech and infrastructure startups out of its new, 6x larger fund – TechCrunch

Da Christian Lawless grundla Conversion capital in 2015, fintech just started to take off.

But Lawless, which started the venture firm after serving in leading positions in the capital markets of Lehman Brothers and Barclays, had a vision that financial services infrastructure should be separated as companies moved critical operating infrastructure to the cloud. Lawless raised $ 10 million and $ 20 million for Conversion Capital’s first and second funds, respectively.

Since Conversion Capital was formed, the company has supported more than 60 startups, and counts among its portfolio such as the corporate budget giant Ramp, Vesta, Figure, Braid, Blend, Wisetack and Booster Fuels, among others. It has seen 17 exits, mainly through M&A and a stock exchange listing (Mixture).

In the years since Conversion was founded, fintech has largely exploded – driven by a pandemic-induced, accelerated digital transformation from financial companies around the world. Lawless’ belief that infrastructure is the key to unlocking innovation in space has been validated as infrastructure companies continue to be among the largest recipients of risk financing in space, even in a period of decline.

Today, Conversion Capital announces that it has raised $ 122 million for its third fund – more than six times the size of the previous fund – to support the start-up of fintech and early-stage infrastructure. Lawless said he and his partners, Blend co-founders Eugene Marinelli and Erin Collard set out to raise $ 100 million and reach the goal by the fourth quarter of last year. The company raised an additional $ 22 million in the first quarter of 2022. It currently has $ 254 million in total assets.

Conversion plans to go back 25 to 30 fintech companies out of the last fund, reserve at least 30% for follow-up investments. It will focus on startups building software, cloud infrastructure and computer technology. So far, tthe company has begun distributing capital from the new fund across the fintech landscape and into adjacent industries that it believes are “undergoing structural transformation”.

Conversion will distribute initial checks from $ 500,000 to $ 5 million in pre-seed through Series A companies, with “founder-led engineering teams.” ActualLawless said Conversion is betting on a trend he suspects will take off – engineers from companies that have gone public and are leaving to start their own companies.

In the madness of 2021, Series A was too expensive for Conversion to “play in”, Lawless noted, but he believes “it will be reset now”.

In the meantime, conversion is as emphatic on what it does not want to invest in as on what it wants.

“We have never invested in companies that take balance sheet risk, so you will not find us investing in a lender, per se,” Lawless told TechCrunch. “For example, we avoided peer-to-peer direct lending mania during 2017. We also avoided many of the mortgage companies, and instead chose to invest in picks and shovels, and the core technology itself.”

Also, especially, Despite the fact that Lawless was born of a Bolivian mother and an Irish father, the investor will not distribute capital in LatAm and most of Europe – where he believes a deep knowledge of local currencies and guidelines is needed to do so effectively. Instead, The conversion limits investment to US and London-based companies which it believes “will benefit from macro tailwinds and global disconnection,” according to Lawless.

“Our experience drives our belief that the United States will remain the epicenter of innovation. Past market corrections have proven that we have the most robust economy in the world,” he said. “We still believe that if the United States were a startup, it would be one of the largest startups in the world, and we want to invest in the ecosystem that is built and born from hopefully stable policies, stable policies and stable economies.”

Conversion operates especially under the assumption that Re-onhoring the supply chain and manufacturing provides “enormous opportunities” for infrastructure technologies, especially given the fact that highly regulated industries – such as financial services – can now build in the cloud and not just build on the spot and move to the cloud.

In the last year, the conversion has been cautious as many other VCs went on an investment round.

“One thing I’ve always looked at is that you probably prefer to raise money in a beef market and then distribute in a bear market,” he told TechCrunch. “We didn’t actually allocate much capital last year, because the market seemed incredibly overheated and everything seemed to point to a recession or some sort of correction.”

As such, Lawless added, Conversion did not allocate much capital in 2021 other than “a handful” of investments in companies.

“So we still have a large majority of that capital, and now we’m very excited to start implementing it,” he told TechCrunch.

“I do not want to say that we are jumping on someone’s grave. That’s not the point, but as an investor, a lot is happening globally macroeconomically … and we think fintech can help solve all these problems, Lawless said.

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