Yash Patel sits down with Silicon Valley fintech vet, Pemo Theodore, to discuss his latest fintech investments that will democratize access for the masses and help people grow their personal net worth. He also shares his perspective around the current fintech space.
Pemo Theodore 00:00
Tell me a little bit about Telstra Ventures and what you guys do.
Yash Patel 00:13
The best way to think about Telstra Ventures is, investing in lighthouse entrepreneurs, typically at the post -product market fit kind of inflection stage. Seeing strong growth and where we can add value in several ways, not just capital, but also opening up new markets in Asia and Australia;
Ways that we can leverage data science to help our portfolio companies with everything from benchmarking their competitors, and other ways they can be more efficient with their operations.
I tend to focus a lot on consumer FinTech, vertical SaaS and gaming and esports. But in particular, more recently, I’ve sort of spent a lot more time in FinTech. We’ve had three or four great investments. We’re big believers in the growth of Super Apps, the convergence of effectively e -commerce and FinTech, similar to what we’ve seen in Asia.
One of them is super.com, which is an exciting business that’s helping many lower FICO score, lower socioeconomic folks in the United States build credit and effectively enter the US financial kind of grid in a more thoughtful way.
We feel like existing FinTech or larger incumbents are servicing higher net worth older individuals. But Gen Z’s and others, haven’t been able to access many of these services.
So many of the FinTech companies we’re investing in are democratizing this access or these capabilities for the masses.
One of the most recent companies we led a Series A in is a company that’s allowing many underserved immigrant populations in the United States access basic financial services.
Like unlocking and building credit, getting access to basic savings and checking accounts, automated tax prep, really allowing users to take control of their own finances.
Maybe you and your children could have benefited from things like WealthTech 3 .0 or wealth -building, typically reserved for private wealth managers at Goldman Sachs and Morgan Stanley that serve high net worth individuals.
Why shouldn’t everyone be able to access those capabilities, that education, and that type of opportunity to kind of grow your future net worth?
It is hard to switch over from some of the big banks in the US, whether JPMorgan Chase or Wells Fargo, Bank of America that have developed decades of trust with many consumers.
I guess a recognition that many of the existing platforms offered by the big banks that I previously mentioned haven’t really had intuitive experiences that are native to younger populations.
So whether it’s mobile, cloud, AI, we’re seeing this convergence of really interesting technologies that becomes very easy for a developer and someone who’s very in tune with that demographic to build something that is far more effective and profound in making an impact.
AI is an area that we continue to monitor, not just across Fintech, but how it’s disrupting many other sectors.
Pemo Theodore 08:19
Is it as big as it appears? Is it going to disrupt other industries? What’s your perspective?
Yash Patel 09:03
We’ve seen a lot of pitches around AI co -pilots in accounting and finance to assist with things like financial analysis or auditing and bookkeeping, detecting fraud.
People are using AI in a thoughtful way to give these existing auditors and bookkeepers superpowers and more efficient use of time.
Our existing companies, particularly the wealth management space that are using LLMs, large
If you ask chat GPT for advice on whether you should invest in a stock or not, they actually refuse to answer it because there will be regulatory scrutiny.
Pemo Theodore 10:51
I’m just wondering how things have changed with all the dramas that have happened in the FinTech space, particularly with cryptocurrencies and Bitcoin problems.
Yash Patel 11:24
I’d say for the last 12 to 24 months, we’ve seen this narrative, particularly in the media around consumer FinTech or FinTech really struggling.
A large reason for that was many of these companies raised in 2021 in this zero interest rate environment where money was pretty free and readily available at pretty inflated valuations. And then naturally in 2022 and 2023, we saw down rounds as these companies were looking to survive, not get more offensive, but just survive.
And then in 2024, I’d say FinTech platforms have emerged with better unit economics and are poised to get more offensive and aggressive. I think the narrative has been focused on the late stage and publicly listed FinTech companies, companies like Robinhood and Coinbase that really, really struggled in terms of their valuation multiples in the public markets.
So that’s on one end of the spectrum. But then on the other end, the areas that we focus on here at Telstra Ventures, Series A and B, early stages, many of the smartest minds and builders, they’ve been tinkering away and continuing to get great traction in various areas that they’re disrupting across FinTech.
I call these builders effectively, they never really cared about what public multiples that Coinbase or Robinhood were trading at. They’re still early. If they do go public or see a trade sale, it might be five to seven years.
They have a longer hold period for the investors backing them. So those are the companies that we’ve really focused on. And we’ve seen our growing three, four, 5x year on year, quietly building away while this narrative in the media around Robinhood and Coinbase is getting killed, effectively putting a dagger in the heart of FinTech.
We take a contrarian view that is robust and strong. And the people that matter most, the builders, they’re seeing great traction. That’s how we view 2024 and beyond.
Cryptocurrency – there’s no secret that Web3 and blockchain had a rough winter in 2022 and 2023. We continue to look at core blockchain developer activity that our data science team monitors through GitLab repositories and other sources of data.
The SEC’s approval of a bunch of Bitcoin ETFs that we’ve seen, ARK, BlackRock, and this halving event around Bitcoin that could drive Bitcoin to new heights. I mean, we’ve seen it in the past few days at over sixty thousand dollars, right?
We think Web3 and blockchain will surge in 2024 and beyond after a pretty rough 2022 and 2023. That means more actual revenue generating projects and Web2 and a half and Web3.
Speculators and people issuing tokens. So people learn their lesson and are now going to start building a greater velocity.
