The venture investor backing high-growth start-ups like YieldStreet, MoneyLion and more on how fintech leaders can drive scale and attract growth capital
In the world of fintech venture capital, firms that combine entrepreneurial energy with depth of experience stand out to successful entrepreneurs seeking growth equity investment partners.
It’s no secret that a surge of private capital to fintech across the board has made competing for deals more intense – But thanks to its 35 year track record and a leadership team that embraces innovation, Edison Partners continues to lead in identifying and supporting the expansion of high-growth businesses.
Founded in 1986 and headquartered in Princeton, NJ, the firm is currently investing out of its tenth fund, and its active portfolio has created aggregated market value exceeding $10 billion.
Today, the firm manages more than $1.4 billion in assets, targeting high-growth companies located outside Silicon Valley with $10 to $30 million in revenue. Its investments encompass buyouts, recapitalizations, spinouts and secondary stock purchases, with an emphasis on the fintech, healthcare IT and enterprise software solutions.
Leading the firm’s fintech investments group is Jennifer Lee, Principal, who joined Edison Partners in 2016 and has executed 25 complete transactions for the firm over the past five years. Companies she has led or co-led investments in encompass MoneyLion, gohenry, YieldStreet and Fund That Flip.
WSR recently connected with Lee to get her insights on where to go for future fintech growth opportunities, as well as what fintech entrepreneurs need to get right – and the mistakes to avoid – to drive scalable growth and attract top-tier capital partners.
WSR: The fintech companies that you’ve spearheaded investments in on behalf of Edison Partners seem like a very diverse set of businesses – What’s the connective tissue, strategically speaking?
Each of the companies we invest in are exciting and unique businesses on their own, but there are some common themes. They are all high growth businesses playing in the intersection of financial services, technology, and innovation. And they each address a strong need and market with strong management teams.
The likes of MoneyLion and gohenry – in their respective target customer segments – focus on financial wellness, serving the traditionally underserved and providing tools and services for their financial well-being.
In the same vein, Yieldstreet democratizes esoteric asset classes previously only reserved for the top 1%, making alternative investments much more accessible to individuals for holistic wealth management.
Similarly, yet in a different way, Fund That Flip focuses specifically in one asset class, building a category leadership in the massive fix and flip market to help all players in the industry with a technology and innovation.
All of these companies are leaders in their space, with top notch management teams that understand the road to success isn’t overnight and takes a lot of hard work and vision.
WSR: How would you describe the “sweet spot” fintech firm that Edison Partners would be interested in partnering with, in quantitative and qualitative terms?
We’re looking to partner with high-growth fintech companies that are addressing a key need with technology in a large market.
One of the most important things we look for is the management – leaders with vision, execution, and passion – who have scaled the business capital efficiently to about $10-30+ million in revenues and who are looking for a capital partner to help take their business to the next level.
We’ve invested continuously across all the different subverticals within fintech. We bring the firms we invest in with knowledge over the last 35 years in scaling across different business models, and across different areas of financial services – Together with our commitment to be a true value-add partner to our CEOs and management teams.
WSR: What advice would you give wealthtech start-up entrepreneurs on key steps to take in the first 24 months from initial launch to best position their businesses to attract growth equity investors? And what are the distractions or pitfalls they should avoid?
Having a vision and driving alignment – in terms of your management team as you continuously assess what you need for the next stage of the business, your advisors, and soon, your board of directors – while surrounding yourself with others who can help you succeed in the entrepreneurial journey will be crucial.
As you execute on your company growth plan, it’s also important to keep in mind that capital formation is a long-term business strategy that must be consistent with your goals for your company.
WSR: What makes Edison Partners stand out as a preferred capital partner to young, successful and growing fintech business?
We bring significant experience helping CEOs and their teams grow and scale, with our extensive investing and operating experience through growth capital, our Edison Edge operating platform, our Edison Director Network, and executive education programs.
Beyond our fintech industry expertise, we employ a truly integrated approach to accelerating growth and creating value for businesses, from which our companies benefit tremendously.
We always strive to be a true partner to our management teams through all the good and bad of the growth journey.
WSR: With the surge of new capital entering the fintech space, have you found it to be more competitive or challenging in capturing dealflow? Why or why not?
There’s certainly been a lot of activity in private markets – especially in fintech.
We’ve been able to stay competitive however through our differentiation and our partner mentality to fintech growth companies, who understand and appreciate our industry expertise and alignment.
WSR: If you had to eat the exact same meal every day for an entire week, what would it be, and why?
For some reason, grapes come to mind, even if that won’t be such a balanced meal. Perhaps sushi will be more of a balanced meal to eat for an entire week – and I’ve actually done that before!
Michael Madden is a Contributing Editor & Research Analyst at Wealth Solutions Report. He can be reached via email at ContributingEd@wealthsolutionsreport.com