Better Tomorrow Ventures’ Sheel Mohnot achieved some of his biggest wins before he ever started a venture. The investor previously worked as a partner 500formerly known as 500 Startups where he established and managed a dedicated fintech fund and helped build an accelerator.
There he met his eventual founder at BTV – Jack Gibson — and backed a cadre of fintech startups including Chipper and Albert, each with a $2.5 million valuation. Today, Chipper is valued at over $1 billion, and Albert has raised over $175 million.
And while the company certainly cashed in on that early track record — raising a second $225 million fund last year — the duo feel it’s time to launch a nod to their roots. Better Tomorrow Ventures tells TechCrunch it is launching a fintech accelerator, this time under its own roof, called The coin.
The Mint will be a three-month accelerator based in San Francisco that cuts $500,000 checks in exchange for 10% equity in six to 10 startups. The first cohort, which will start next August, has already accepted one company and sent a second letter of acceptance today.
“It’s something we’ve done successfully before. Our returns have been insanely, insanely good from that first fintech cohort, so I think if we can get close to that again, our LPs will be happy,” Mohnot said.
The accelerator offers some basic support: a speaker series featuring founders of Mercury, Flexport, and NerdWallet, expert office hours, wellness resources, hiring support, and desk space. Unlike some Zoom accelerator programs, The Mint is long San Francisco: two team members move to the city to help with logistics, and Better Tomorrow rents a new office space, outside of Mission HQ, dedicated to the accelerator.
Better Tomorrow seems to step in where it lacks according to Y Combinator. “YC is built for scale. The advice is a lot like one size fits all,” Mohnot said. “We felt with fintech, there are so many things that are unique about building that it makes sense to have something different.”
Among some early-stage investors, YC’s new standard deal has been met with varying degrees of fatigue. Last year, YC announced it would still be offering its original deal — a $125,000 check in exchange for 7% equity — as well as a $375,000 check against an unlimited SAFE ticket with a most favored nation (MFN) clause. ). The latter has generated some controversy: an MFN means that YC gets to invest $375,000 on the same terms as the investor who has the best terms in the next round. Now YC companies are less incentivized to raise a small amount of angels, and more incentivized to optimize for higher valuations after Demo Day, so dilution is limited when accepting that $375,000 check.
“We think the MFN clause (which YC is currently offering) may be doing companies a disservice. Because in the end they almost have to raise at a very high valuation… you can see they’re biting their ass a bit. Because if they don’t hit the stats, the next round is even more challenging,” Mohnot said. While BTV’s 10% ownership is higher than other VC-broken programs — take NextView’s $200,000 in exchange for an 8% stake, for example — it’s less than what BTV usually targets for initial checks, at between 15% and 20% ownership.
Mohnot says BTV will continue to invest outside the accelerator, but the big focus for the rest of the year in terms of net new investment will be within the program.
“I think there’s a TechCrunch article on fintech now,” Mohnot said pessimistic. “We are still very excited about the future of fintech and we loved fintech before it was cool. At a fundamental level, financial services are 20% of GDP, and they are inherently digital, so the numbers make sense.”