Sheel Mohnot, Better Tomorrow Ventures - We Think That We're In The Very Early Innings of Fintech | #355

Episode Summary

Executive Summary: The episode profiles Sheel Mohnot, co-founder of Better Tomorrow Ventures, tracing his path from software and consulting to microfinance, startups, auctions, and finally fintech VC. The conversation centers on his seed-stage fintech thesis, global investing in underbanked markets, and portfolio examples like Unit, Coast, India Gold, Mendel, Super, and Albert. It also highlights his pronoid worldview and the importance of helping founders beyond capital.

Main Topics: Sheel Mohnot’s background and worldview (Priority: 5/5): Sheel recounts his upbringing in Pittsburgh, education at Carnegie Mellon, early career in software and consulting, and the experiences that shaped his optimism and interest in hard problems and emerging markets. He describes himself as a 'pronoid'—someone who believes the universe conspires in his favor. From founder to investor: early fintech and auction ventures (Priority: 5/5): He explains how a microfinance project and living on under $2/day in India led him into fintech, then startup founding, including Fee Fighters and a domain-auction business. The auction company used transparent bidding to settle contested top-level domains and inspired thoughts on broader applications like housing and resource rights. Better Tomorrow Ventures’ seed-stage fintech strategy (Priority: 5/5): He outlines BTV’s focus on pre-seed and seed fintech globally, typically leading rounds with sub-$15M to sub-$20M valuations and average first checks around $1M+. The fund invests more in founders than in rigid theses and prioritizes teams with strong execution and customer insight. Global fintech opportunities in emerging markets (Priority: 5/5): Sheel discusses why Africa, LATAM, South Asia, and Southeast Asia are attractive: large young populations, rising smartphone penetration, underbanking, and opportunities to use alternative data. He cites Africa as especially compelling due to mobile-first financial behavior and low banking access. Portfolio examples and product theses (Priority: 5/5): He walks through several investments: Unit (banking-as-a-service), Coast (fleet spend cards), India Gold (gold storage/loans), Mendel (LATAM spend management), Super (parametric insurance), and Albert (self-driving personal finance). Each illustrates his interest in infrastructure, embedded finance, and products that simplify financial life. The impact of frothy capital markets on seed investing (Priority: 4/5): He notes that abundant venture capital has raised seed valuations, making disciplined entry harder, but also supports portfolio markups and deal flow. He argues that while competition is intense, BTV’s fintech specialization, founder help, and network provide differentiation.

Key Arguments: Seed-stage fintech is still early; infrastructure and product building blocks are improving, creating room for many new winners. BTV should back founders, not just ideas, because the best companies often pivot based on feedback and persistence. Emerging markets offer outsized fintech opportunities because smartphone adoption is rising faster than formal banking access. In Africa and similar markets, alternative data from mobile phones can materially improve underwriting compared with U.S.-style constraints. Embedded finance and banking-as-a-service lower the barrier for non-fintech companies to become fintech companies. Helping founders with hiring, partnerships, and follow-on capital is often more valuable than formal board meetings. High seed valuations can distort decision-making and reduce the chance for founders to iterate or pivot. Consumers generally do not want to manage money manually; they want systems that automate saving, investing, spending, and debt management.

Data Points: Living expenses during India microfinance project: Sub $2/day - Sheel describes living like a borrower for a year while working in India on microfinance. Auction application fee for top-level domains: $185,000 - Cost to apply for a new ICANN top-level domain such as ".meb" or ".zoom". Auction company fee: 4% - The fee charged on domain auctions run by Sheel’s company. Number of domain auctions run: 155 - Total auctions executed by the domain-auction business. Total possible contested names: ~190 - Approximate number of top-level domains in contention. Better Tomorrow Ventures Fund I size: $15 million - Sheel describes the initial fintech fund he bootstrapped before expanding to outside investors. Better Tomorrow Ventures target raise: $60 million - Original fund target during the 2019-2020 raise. Better Tomorrow Ventures hard cap: $75 million - Final capped fund size after oversubscription during COVID-era fundraising. BTV average first ticket: ~$1M to under $1.5M - Typical check size for pre-seed/seed lead investments. Typical valuation sweet spot: Sub $15M to sub $20M - Preferred entry valuations for BTV investments. Number of investments in 500 FinTech fund: Close to 80 - Sheel’s earlier fintech syndicate/fund investment count. Estimated IRR for 500 FinTech: ~100% IRR - Sheel cites strong performance for the earlier fintech syndicate/fund. BTV current portfolio count: Two dozen - Approximate number of investments in the newer Better Tomorrow Ventures fund at the time of the interview. Simple bank launch cost/time example: $12 million and 2 years - Contrast used to show how hard banking infrastructure used to be. Unit build time example: 6 weeks - Sheel says two people can now issue a card and build an app quickly using Unit. FleetCor market size: $25 billion - Size of the legacy fleet payments market Coast is targeting. WEX market size: $8 billion - Another large legacy fleet payments competitor mentioned as an opportunity. India Gold household gold stock: Over $1 trillion - Gold sitting unused in homes is presented as a major financial opportunity in India. Africa unicorn count at a prior point: 1 - Sheel notes that six months earlier there was only one African unicorn, Interswitch. Africa youth population growth: 50% in the next decade - Used to illustrate demographic tailwinds for digital finance in Africa. Unbanked share in Africa: Two-thirds - Sheel cites this as a major driver for mobile-first financial products. Mexico earthquake claims delay: 50% unpaid after one year - Illustrates the value proposition for parametric insurance like Super. Kin’s SPAC ticker: OCA - Sheel mentions Kin going public via SPAC.

Pivotal Quotes: "a pronoid person, which is me, thinks the universe is conspiring in our favor." — Sheel Mohnot: Explaining his personal mindset and the opposite of paranoia. "I want you to work on hard problems, want you to work in emerging markets, and I want you to write about it." — C.K. Prahalad (as recounted by Sheel): Advice that strongly shaped Sheel’s career direction. "Most people don't want to think about their money at all. They just want to know that they're being taken care of." — Sheel Mohnot: Describing why Albert’s product evolution made sense and why automation matters in fintech.

Implications: The episode shows that fintech’s biggest opportunities remain in infrastructure, automation, and underserved global markets. For founders and investors, execution, distribution, and trust matter as much as ideas. For listeners, it suggests embedded finance and emerging-market innovation will keep expanding fast.