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Tuesday, Jun 28, 2022

Sunwest Helps Start VC Fund BankTech Ventures

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Irvine-based Sunwest Bank is helping kick off BankTech Ventures LP, a venture capital fund designed to connect fintech startups to community banks.

BankTech Ventures recently hired as managing director a prominent member in Orange County’s startups scene: Carey Ransom, whose 25-year background in software and venture capital includes early senior executive positions with fintech startups Aspiration in Marina del Rey and Tustin’s Happy Money, chief product officer at Costa Mesa’s Experian PLC, and most recently as co-founder and president of Operate, a venture studio based in Newport Beach investing in fintech entrepreneurs.

“Bank innovation is becoming a material part of the ecosystem,” Sunwest Bank President Carson Lappetito told the Business Journal. “Community banks have to innovate to survive.”

The fund’s other general partners are Steven Hovde, chairman and CEO of Hovde Group; Eric Sprink, CEO of Coastal Community Bank;  Charles Potts, chief innovation officer at the Independent Community Bankers of America; and Wayne Miller, executive director, The Venture Center.

Hovde with his brother Eric Hovde own a controlling interest in Sunwest Bank, which has approximately $2.1 billion in assets and $220 million in equity.

$150M-$200M Raise

BankTech, which began this year, calls itself the first venture fund created for and by key leaders in community banking, bank technology and fintech.

It aims to raise $150 million to $200 million for its first fund, which was expected to close at the end of October.

The problem community banks face is an increasing expectation that its technology looks and feels like other emerging tech platforms, including convenience and simplicity.

“These changes are driving a growing digital divide between technology enabled banks, fintechs and Big Tech,” BankTech Ventures’ website said. “These companies are gaining market share by taking customers from traditional banks.”

The company expects to reach over 150 community banks across the U.S., making the strategic value of the fund’s ecosystem for both bank-focused startups and community banks unprecedented.

“Community banks are the cornerstone of thousands of cities and towns across the country, and as they continue to evolve in serving their communities, emerging technologies will play a key role,” Ransom said.

Local fintechs serving smaller banks have seen their share of success of late.

Costa Mesa software firm MeridianLink, whose services are used by smaller banks and credit unions to set up digital lending and deposit accounts, went public a few months ago (NYSE: MLNK) and is now valued around $2 billion.

Happy Money, which partners with credit unions and other smaller banks to help consumers pay off credit card debt and improve financial literacy, is among OC’s better-backed fintech startups with over $70 million reported raised as of last year.

“I’m excited to join an all-star banking and technology team in launching BankTech Ventures to invest in the next generation of community bank-focused technologies,” said Ransom, an early investor in Happy Money.

“Together, we will help ensure community banks remain competitive amid a rapidly changing landscape.” 

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