Spanish Bank BBVA is doubling down on investing in the fintech sector with an increase of investable funds and a partnership with a venture capital firm. Having launched the BBVA Ventures fund in 2013 with $100 million to invest in digital fintech startups, the bank has decided to add another $150 million in funds. However, rather than operate investments through BBVA ventures, the bank is partnering with Propel Venture Partners.
Based in San Francisco, Propel Ventures is tasked with managing the original $100 million from BBVA Ventures along with its portfolio that includes stakes in Prosper, Taulia and Personal Capital. In addition, BBVA is providing another $150 million to be managed by Propel Ventures and invested in digital fintech companies.
In tasking Propel Ventures with the entire $250 million, BBVA believes that its capital will be best managed in the hands of an independent and focused venture capital firm.
Increasingly competitive fintech venture capital environment
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On the decision, Teppo Paavola, BBVA’s Chief Development Officer and General Manager of New Digital Business stated: ”In an increasingly competitive fintech venture capital environment, we believe that our increased capital, Propel’s independence and a presence in London can enable us to invest in the best fintech start-ups and better support BBVA’s vision of using technology to change financial services for the benefit of the customer.”
Since launching its venture fund in 2013, BBVA has been joined by other global firms such as Santander and Rakuten that have since created multi-million dollar fintech funds. One of the hindrances of corporate backed funds when investing is the goal of deals being strategic.
As such, not every startup with strong potential aligns well with strategic investors. In addition, many startups have preferences not to take on strategic investors due to potential conflicts with future customers. By partnering with Propel Ventures, BBVA aims to limit the barrier of being a strategic investor.
Leading management of the $250 million investment are Propel Ventures Managing Partners Jay Reinemann, Tom Whiteaker and Ryan Gilbert. The transition is expected to be smooth as Reinemann and Whiteaker previously managed the BBVA Ventures fund.
Within the fintech sector, Propel Ventures will be investing in early and late stage startups with a focus on the payments, credit, insurance, wealth management, e-commerce, security and compliance sectors. As part of their partnership, Propel Ventures will be opening a London based office to assist investing in UK and European based startups.