FINTECHTALK

HELLO FINTECHTALKERS,

In this episode, I sat down with an all-star panel featuring Amy Oldenburg, Managing Director at Morgan Stanley, Lex Sokolin, Managing Partner & Co-Founder of Generative Ventures, Rana Gujaral, CEO of Behavioral Signals, and Dr. Riad Hartani, AI and infrastructure expert, to unpack the rapidly evolving AI landscape. From the rise of DeepSeek and the almost trillion-dollar Stargate Project to the battle for AI supremacy between the U.S., China, and Europe, we dive deep into the future of artificial intelligence.

Our guests share insights on the impact of AI on emerging markets, the transition from Co-Pilot AI to fully autonomous agentic AI, and the ethical challenges posed by a world where AI-driven decision-making becomes the norm. We also explore the race to Artificial General Intelligence (AGI) and beyond to Artificial Superintelligence (ASI)—and what that means for global power dynamics.

If you're a investor, founder, CXO, or someone passionate about the future of AI and finance, this episode is a must-listen.

My perspective on how AI will develop through its three key components beyond infrastructure: foundational models, applications or agents, and human interfaces.

AI evolution is complex and multifaceted, as illustrated in the figure above. Foundational models are advancing in reasoning, while the rise of physical models with vision, sound, and spatial awareness is driving innovations in autonomous vehicles and humanoid robotics.

Over time, AI will extend beyond human sensory perception—incorporating energy and quantum awareness—paving the path toward Artificial Super-intelligence.

While AI infrastructure and its immense demand for energy and compute have been widely debated:

Two impending Cambrian Explosions will redefine our world: the widespread adoption of software agents and humanoids in everyday life.

AI agents are poised to replace traditional software, potentially transforming all SaaS into intelligent, autonomous entities. Just as cell phones have become universal, personal humanoids may soon be an essential part of every household. Software designed for human use will soon shift to being consumed by AI agents, with many human-driven decisions increasingly handled by these intelligent systems. The matrix of AI agents will spread across the internet and enterprise, fundamentally reshaping both realms and ushering in a new digital landscape.

Finally, human-computer interaction, once confined to keyboards, mice, voice, and text, is poised for a breakthrough—evolving into direct brain-to-AI connections through technologies like Neuralink.

Imagine the potential of a human seamlessly integrated with AI or a foundational model, harnessing its intelligence at the speed of thought.

Early integrations will likely begin at the cortical level, but a true evolutionary leap will occur when AI connects with the limbic system, unlocking insights into human consciousness and our perception of reality—areas that even the modern science struggles to fully understand.

Catch me in Vegas if you're attending Human[X] or the Fintech meetup. Discount pass below HX25_Fintechtalks for Human[X].

* 0:00 – 4:20 – Meet the All-Star Panel & Recent Major Developments in AIIntroduction to the panel and a discussion on key advancements in AI, including Stargate, Deepseek, and AI infrastructure.

* 4:20 – 26:00 – The Rise of DeepSeek: Game-Changer or Hype?The panel explores DeepSeek’s impact as a Chinese AI player with open-source models. Rana Gujral discusses how DeepSeek’s modular and open-source approach is challenging U.S. dominance despite GPU export restrictions.Lex Sokolin and Amy Oldenburg provide an outsider’s perspective on DeepSeek from China’s viewpoint, touching on the rise of bottoms-up nationalism.Riad Hartani examines the infrastructure side, comparing open-source vs. closed-source approaches.The panel discusses the potential strategic narrative behind DeepSeek’s rise.

* 26:00 – 38:00 – Demystifying Multi-Modality, Reasoning, and AgentsRana and Riad break down AI jargon, explaining hardware, software, models, and agents in simple terms.

* 38:01 – 55:00 – Exciting AI Capabilities in the Industry & How to PrepareA discussion on domain-specific models, reasoning, and agents.How to build AI expertise within teams, the debate on platform shifts vs. incremental improvements.Exploring the intersection of Web 3.0 and AI, and AI as a driver for GDP growth.As AI grows more autonomous, the panel debates the ethical implications of AI-driven decisions in finance, healthcare, and defense. Lex Sokolin calls for transparency and better regulation to prevent AI from being used for mass surveillance or financial manipulation.

* 55:00 – 1:06:00 – Applications of AI – Humanoids, Agents, in Defense, Social EngineeringDiscussing the rise of agents as a service, AI-based digital twins, and their use in social engineering and hyper-personalized entertainment.

* 1:07:00 – 1:15:00 – Techplomacy & the Difference Between the U.S. and Europe on AIAn exploration of techplomacy in geopolitics and a breakdown of Vice President JD Vance’s speech on AI regulation in Europe.The panel examines the geopolitical battle for AI dominance, with the U.S. pushing a less-regulated, innovation-first approach and Europe focusing on tighter regulations. Dr. Riad Hartani warns that Europe may fall behind if it doesn’t adapt swiftly.

* 1:15:00 – 1:20:00 – AGI and ASI (Superintelligence)A look at the race to Artificial General Intelligence (AGI) and beyond, into Artificial Superintelligence (ASI).Rana Gujral stresses that the first to develop ASI will reshape global power structures. The panel speculates on how close we are to AGI and the potential implications for humanity.

* 1:20:00 – 1:25:00 – Closing Thoughts: Advice for President Trump and Other AI Decision-MakersFinal advice on AI’s role in solving global problems, the need for more collaborative and diplomatic approaches, and the importance of grassroots AI literacy.AI literacy is essential to educate the public, reducing fear and combating misinformation..

FINTECHTALK: A Top 10% Global Podcast Shaping the Future of Fintech, AI, and Crypto

Ranked by ListenNotes

Looking to amplify your brand's reach? Partner with our podcast and connect with an engaged and loyal audience. Contact us today to explore sponsorship opportunities and elevate your brand! [email protected]

Enjoy and always be in the know,

Paddy RamanathanFounder of iValley and Host of the FINTECHTALK™ Show (on Substack, Apple Podcast, YouTube, and Spotify)

Interested in sponsorship opportunities and be associated with sculpting the future? Please reach out to [email protected].

Thanks to ChatGPT for suggestions.

(Violin piece in podcast, courtesy of my daughter Ilina)

Welcome FINTECHTALKERS!

In this episode, I sat down with Rob Straathof, CEO of Liberis, to explore how embedded finance is reshaping the lending landscape for small businesses. From instant capital access to AI-driven analytics, Liberis is building a small business co-pilot for SMEs worldwide. Rob shares his journey from being raised in a small business family to investment banking to fintech disruption, why traditional banks have missed the mark on SME financing, and how AI and embedded finance will drive the next era of business growth.

Timestamp Table

0:00 – 1:21 – How to to get on the showHow to Get on This Show, Now in the Top 10%. Join the conversation shaping the future.

1:22 – 5:07 – IntroductionRob Straathof, CEO of Liberis, shares his background—from growing up in a family of small business owners to his early career in investment banking and fintech.

5:08 – 10:09 – Why Embedded Finance is a Game-ChangerHow embedded finance is revolutionizing financial access for small businesses, removing friction from lending, and integrating financial tools into existing platforms.

10:10 – 15:25 – The Small Business Co-PilotBeyond lending: how Liberis is evolving into a financial operating system that provides real-time analytics, marketing insights, and growth opportunities for small businesses.

15:26 – 19:50 – Why Traditional Banks Missed the MarkRob explains why banks have failed to serve small businesses effectively and how fintechs like Liberis are filling the gap with AI-driven insights and seamless capital access.

19:51 – 25:37 – Frictionless Lending & Instant Capital AccessPre-approved, data-driven financing that eliminates paperwork, rejection fears, and long application times—how Liberis ensures small businesses get the funds they need in minutes.

25:38 – 28:50 – Global Expansion & Go-to-Market StrategyLiberis operates in 14 countries and is scaling rapidly—leveraging partnerships with platforms like eBay, WorldPay, and Vegaro to provide embedded finance solutions worldwide.

28:51 – 35:12 – AI-Powered Small Business FinanceExploring AI’s role in building a fully automated financial co-pilot, integrating marketing, inventory, and payroll insights for small business owners.

35:13 – 41:42 – Financial Inclusion & The Future of Small Business LendingWhy access to capital is the #1 factor driving upward mobility—how Liberis is democratizing funding and empowering entrepreneurs globally.

41:43 – 45:28 – Agentic AI & The Next Phase of Embedded FinanceHow AI-driven agents will transform lending, offering personalized financial strategies, and automating business operations for SMEs.

45:29 – 48:28 – Where to Find Rob & What’s Next for LiberisRob shares Liberis’ upcoming milestones, future AI integrations, and where to connect with him and the team at fintech events or online.

If you're a fintech founder, CXO, or someone passionate about the future of embedded finance and AI-driven small business lending, this episode is a must-listen.

FINTECHTALK: A Top 10% Global Podcast Shaping the Future of Fintech, AI, and Crypto

Ranked by ListenNotes

Looking to amplify your brand's reach? Partner with our podcast and connect with an engaged and loyal audience. Contact us today to explore sponsorship opportunities and elevate your brand! [email protected]

Don't miss our upcoming show on the State of AI with top industry leaders: Amy Oldenburg (MD, Morgan Stanley), Lex Sokolin (Partner, Generative Ventures), Rana Gujral (CEO, BehaviorSignals), and Dr. Riad Hartani (AI Infrastructure builder) and possibly Professor Solomon Darwin (UC Berkeley Haas School of Business). We'll dive into the latest in AI—from foundational model evolution and the DeepSeek moment to AI agents, energy and chip innovation, and what’s next. Subscribe now to stay ahead of the curve!

Enjoy and always be in the know,

Paddy RamanathanFounder of iValley and Host of the FINTECHTALK™ Show (on Substack, Apple Podcast, YouTube, and Spotify)

Interested in sponsorship opportunities and be associated with sculpting the future? Please reach out to [email protected].

Thanks to ChatGPT for suggestions.

(Violin piece in podcast, courtesy of my daughter Ilina)

Welcome back and a BIG thank you FINTECHTALKERS!

FINTECHTALK: A Top 10% Global Podcast Shaping the Future of Fintech, AI, and Crypto

Ranked by ListenNotes

Looking to amplify your brand's reach? Partner with our podcast and connect with an engaged and loyal audience. Contact us today to explore sponsorship opportunities and elevate your brand! [email protected]

In this episode, I sat down with Steven Woods, founder and CEO of Stirlingshire, to explore how his company is disrupting the wealth management industry. From his journey from the military education to Wall Street to building a fintech startup, this conversation unpacks the future of financial advisory and how AI may reshape the landscape.

Timestamp Table

0:00 – 0:50 – How to Get on This Show, Now in the Top 10%. Join the conversation shaping the future.

0:56 – 5:58 – IntroductionDiscussion on Steven’s education at Wentworth Military Academy and how military training benefits startup founders.

5:59 – 7:29 – Revolutionizing Wealth ManagementHow Stirlingshire is transforming the traditional wealth management structure.

7:30 – 13:42 – The Economics of CommissionsBreakdown of commission structures—what percentage the firm keeps versus what advisors earn—and how Stirlingshire is disrupting this model in favor of advisors.

13:43 – 17:42 – Advice on Demand: High-Touch + High-TechHow Stirlingshire differentiates itself by offering on-demand advisory services, targeting the Robinhood generation.

17:43 – 19:45 – Integrated Financial PlanningBeyond just disrupting the economics, Stirlingshire is redefining wealth management workflows across different segments.

19:46 – 20:30 – Building a World-Class TeamInsights into the talent driving Stirlingshire’s innovation.

20:31 – 28:27 – Roadmap & Future GoalsPlans to scale by hiring 5,000 advisors, fundraising efforts, and Steven’s cross-country road trip during COVID to raise his first seed round.

28:28 – 34:00 – AI & The Future of Wealth ManagementExploring AI’s role in shaping the next era of financial advising.

34:01 – 36:25 – Where to Find StevenSocial media presence, potential partnerships, and how to check out the Stirlingshire app on the App Store.

If you're a fintech founder, CXO, or someone passionate about the future of wealth maangement, this episode is a must-listen.

Enjoy and always be in the know,

Paddy Ramanathan

Interested in sponsorship opportunities and be associated with sculpting the future - please reach out to [email protected] of iValley and Host of the FINTECHTALK™ Show (on Substack, Apple Podcast, YouTube, and Spotify)

Thanks to ChatGPT for suggestions.

(Violin piece in podcast, courtesy of my daughter Ilina)

Welcome back and a big Thank you FINTECHTALKERS!

FINTECHTALK: A Top 10% Global Podcast Shaping the Future of Fintech, AI, and Crypto

Since its inception, FINTECHTALK has organically risen to rank among the top 10% of podcasts worldwide. It's become the go-to platform for startup CEOs, visionary venture capitalists, and forward-thinking bank innovators to share their stories and insights. With a focus on fintech, AI, and crypto, FINTECHTALK is where the brightest minds come together to shape the industry's future.

Ranked by ListenNotes

For over a decade, FINTECHTALK has been at the forefront of predicting transformative trends in fintech and beyond. From the platformization of banking in 2014 to the rise of the crypto economy and the "FInternet" in 2017, FINTECHTALK has consistently stayed ahead of the curve. Most recently, the podcast has explored how generative AI and intelligent agents are reshaping the knowledge economy and disrupting traditional SaaS models in 2023.

As a trusted voice in the industry, FINTECHTALK has become the platform where brands—big and small—share their stories to help shape the future of finance and technology.

Looking to amplify your brand's reach? Partner with our podcast and connect with an engaged and loyal audience. Contact us today to explore sponsorship opportunities and elevate your brand! [email protected]

In this episode, I had the privilege of speaking with Adam Hughes, the CEO of Amount—a leader in transforming how banks and credit unions deliver digital experiences. Adam isn’t just a fintech veteran; he’s someone who’s been at the forefront of digital lending since the early days, building innovative solutions that have scaled to billions in loans.

We talked about everything from his journey at Avant to how Amount is helping financial institutions compete in a world where digital-first is no longer optional. Adam shared his insights on how AI is shaping the future of bank-tech, the evolution of lending, and what it takes to truly modernize financial services.

If you're a fintech founder, CXO, or someone passionate about the future of finance, this episode is a must-listen. Adam brings a wealth of knowledge about scaling innovation, building partnerships, and staying ahead in an industry that’s always evolving.

Enjoy and always be in the know,

Paddy Ramanathan

Interested in sponsorship opportunities and be associated with sculpting the future - please reach out to [email protected] of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, YouTube, and Spotify)

Thanks to chatgpt for suggestions.

(Violin piece in podcast, courtesy of my daughter Ilina)

Hi FINTECHTALKERS,

This year’s Money 20/20 was all about AI and generative AI. Last year, I wrote about the shift from "FINTECH" to "FINTEL"—a fusion of financial technology with AI—and, in just a year, we’re seeing that vision come to life. From startup funding trends to major incumbents rolling out AI-driven solutions, the transformation is well underway.

On the sidelines of the event, I had the opportunity to sit down with two AI leaders reshaping financial services: Shri Santhanam, EVP and GM at Experian, and Mike Conover, Founder and CEO of Brightwave. Take a listen as they share their vision and the innovations they are building.

Spotlight on Experian and Brightwave

Shri shared insights on Experian Assistant, a tool designed for enterprise data and AI teams. This assistant enables users to conduct data exploration, build and deploy models, monitor their performance, and accelerate the launch of new financial products. It’s a game-changer for organizations looking to enhance their data-driven offerings with speed and precision.

Mike discussed Brightwave’s AI platform, which equips financial professionals with accurate, insightful financial research. By synthesizing insights from thousands of pages of primary sources, Brightwave’s platform automates some of the most tedious aspects of the investment workflow, empowering finance professionals to make faster, better-informed decisions. Brightwave recently raised a $15 million Series A to drive this vision forward.

Epilogue: The Rise of Agentic Banking

The race to develop AI co-pilots and intelligent agents in financial services is in full swing. Fintech has traditionally focused on optimizing distribution—reducing friction, streamlining journeys, and leveraging digital platforms—the next wave, "FINTEL," will center on intelligent agents.

These agents will act as hyper-personalized “bankers” for consumers, small businesses, and corporations alike. Imagine a personal CFO that manages your finances according to specific goals or a robo-advisor that actively manages wealth. With innovations like BNPL and Visa Flex already blurring the lines between products like payments, credit, and deposits, AI agents will make financial services even more goal-oriented and seamless.

As embedded finance merges with Agentic AI, we’re likely to see increasingly autonomous, hyper-personalized, and needs-based solutions. The innovators who master this fusion will lead the next generation of FINTEL unicorns. For established financial institutions, the challenge will be to build competitive solutions to maintain customer relationships—otherwise, they risk being relegated to the role of "dumb pipes" or another model.

The future is here, and it’s one of embedded intelligence and agent-driven finance, offering a more responsive, context aware, and personalized financial experience for everyone.

Enjoy and always be in the know,

Paddy Ramanathan

Follow me X @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, YouTube, and Spotify)

Thanks to chatgpt for suggestions.

(Violin piece in podcast, courtesy of my daughter Ilina)

Hi FINTECHTALKERS,

I sat down with Garnet Heraman Co-founder and Managing Partner at Aperture Venture Capital, and Dave Anderson Founding General Partner at Beat Ventures to talk about the rise of emerging managers and how they differentiate in an increasing crowded venture capitalist space.

Garnet and Dave represent a dynamic new breed of emerging managers, bringing a personalized, niche, and highly flexible approach to founders in the venture ecosystem. Unlike many established Silicon Valley VC firms, they’re not bogged down by the groupthink that has contributed to the persistent disparities in capital access and leaving money on the table due to inherent biases—something I’ve discussed in previous posts (see here).

By breaking away from traditional models, Garnet and Dave are redefining what it means to support early-stage companies, offering founders a more tailored and hands-on partnership that prioritizes innovation and inclusivity.

The benefits to founders working with emerging managers are numerous. Much like a small business gains from the personalized service of a community bank, founders experience a stronger, more meaningful connection with their investors—far beyond just being a line item in a portfolio. Emerging managers often bring valuable operational support, leveraging their deep expertise in both technology and business to help early-stage companies grow. They tend to be more agile, willing to take on greater risks at the earliest stages, and are more likely to innovate in structuring deals, engaging with founders, and building their firm's brand.

The challenge for emerging managers, however, lies in overcoming perceptions around their lack of scale, brand recognition, network access, and ability to offer value-added services. Larger firms often have the advantage when it comes to influencing exits, thanks to their deep relationships and established LP networks. To address this, iValley is exploring the creation of an ecosystem to unite emerging managers—called iValley Venture Catalyst. This initiative is an extension of our existing ecosystem, bringing together multi-stage VCs, startups, and corporates. If you're interested in learning more, feel free to reach out!

Institutional LPs and founders alike should take notice and connect with Garnet and Dave, as well as other emerging managers like them.

Enjoy and always be in the know,

Paddy Ramanathan

Follow me on the new Twitter (X) @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, YouTube, and Spotify)

Thanks to chatgpt for suggestions.

Dave attributes the “VCs do no harm” quote to his former boss Jim Adler Founder and GP at Toyota Ventures. 

(Violin piece in podcast, courtesy of my daughter Ilina)

Links to other FINTECHTALKs on the changing landscape of Venture capital

HI FINTECHTALKERS, (opinion below are my own not necessarily of my guests)

I sat down with Tom Brown, partner and general counsel at NYCA Partners, and Luke Voiles, a trailblazer in small business fintech and now CEO of Pipe. We explored the evolving landscape of fintech, diving into the shift from traditional financial services to embedded finance, to support vertical SaaS solutions, and the integration of AI agents into business ecosystems.

Fintech began its journey of digitizing financial services in the late '90s, marked by the emergence of pioneers like PayPal. This digital transformation laid the groundwork for the explosion of the fintech industry, where nearly every business aspired to be part of the fintech wave—a trend famously captured by Angela Strange’s aphorism, "Every company will be a fintech company."

This evolution continued into what can be called the era of collaboration and ecosystems. Banking as a Service (BaaS) and aggregators like Plaid enabled seamless integration, paving the way for a thriving ecosystem of fintech solutions. During this time, mobile wallets, challenger banks, and specialized fintech applications rose to prominence, meeting the growing consumer demand for more personalized, accessible, and technology-driven financial services.

We are at the dawn of a new era in fintech—one that is hyper-specialized in vertical workflows and will be powered by AI agents. Financial services are becoming increasingly embedded into everyday experiences for consumers and small businesses. Financial services infrastructure is becoming modernized with digital assets enabling near real time clearance/settlement and payments.

Much like the seamless payment experience of an Uber ride, embedded finance aims to make financial processes invisible to users. At the same time, financial product innovation is evolving. Visa Flex, for instance, functions as both a credit product and an interest-bearing deposit. Buy Now, Pay Later (BNPL) merges payments with lending, while digital assets remove the need for traditional settlement and clearance, building new payment infrastructures, as Tom explains.

AI agents, like the Small Business CFO from Pipe, are poised to transform business financial decision-making. As Luke describes, these AI-driven tools will give small businesses greater autonomy, enabling smarter decisions with minimal human input. This shift will reduce complexity, streamline cash flow, and deliver personalized financial insights—all without needing a dedicated finance team.

This era also marks a significant shift in the types of founders driving fintech's growth. The next generation of fintech leaders won’t fit the traditional mold; they will be diverse individuals building solutions for their own communities. This is evident in programs like Bank of America’s Breakthrough Lab, an accelerator supporting underrepresented founders. Here, minority founders are developing specialized applications that tap into opportunities in underserved communities, particularly among Latino and African American populations. The focus on segment-specific innovation reflects a broader trend toward financial inclusivity, and these founders are leading the way in addressing the unique needs of their communities.

Timestamps to make it easy to navigate the podcast.

0-1.40 - Introduction Tom and then Luke

1.41-5.42 - Additional background of Luke in distressed credit and Tom in antitrust litigation and how that has shaped their operating and investing minds

5.43- 28.31 Round 1 - Fintech History and future. So far it has primarily been innovation in distribution of financial services, are we at a cusp of product innovation with embedded finance, digital assets, AI and AI agents.

7.08-13.36 - Luke on verticalization, fintech for main street, AI agents, and how AI could change SaaS model in software delivery. His high schoolers project in Claude.

13.37-20.34 - Tom on his perspective on innovation in fintech - big tech and fintech, real time clearing and settlements, electronic money tokens and how some innovation come from law side than technology.

20.35-28.30 Limitations of ACH and innovations in real time payments, digital assets as new pipe for payments and innovators dilemma of changing banks and regulators outlook towards faster payments.

28.31-34.25 Round 2 - What are Luke and team building at Pipe? Working capital for small business + spend and expense management and verticalized fintech. Capital as a service

34.26- 45.08 Verticalization and embedded finance and variabilty of performance by vertical

45.09-57.0 Round 3 - Will AI disrupt knowledge worker economy? The AI CFO for small business as an example that Pipe is building. Regulated industry and AI automation - the challenges.

57.01 -61.55 - NYCA’s investment thesis - connecting technology to financial services and moving onto digital assets and deep tech like quantum tech.

61.56- 70.58 - Round 4 - US Presidential elections - policy differences between the two candidates as it applies to fintech and small business.

70.59- 76.54 - Closing - Where can people find you, next big things, who are you looking to connect?

If you’re keen to understand the intersection of AI, fintech, and the future, you don’t want to miss this one!

Enjoy and always be in the Know,

Paddy Ramanathan

Follow me on the new Twitter (X) @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, YouTube, and Spotify)

Thanks to chatgpt for suggestions.

(Violin piece in podcast, courtesy of my daughter Ilina)

HI FINTECHTALKERS, (follow me on Twitter (X) for lively discussions on these topics @PADDYRAMANATHAN),

I sat down with Frank Desvignes, founding partner of True Global Ventures (or TGV) 4 Plus. We talked about the unique approach of TGV in the venture capital landscape, their global footprint with local presence in all major theatres, and the recently concluded AI startup competition they recently held in San Mateo.

TGV's remarkable success underscores the essential need for startups to cultivate a global presence early in their journey. This approach is vital for securing capital, accessing diverse markets, and building networks of talented knowledge workers. In light of the recent collapse of Silicon Valley Bank (SVB) last year and the decline in venture debt mechanisms, alongside Elon Musk’s decision to move away from Delaware incorporation, the traditional rules and orthodoxies for startup success are undergoing significant shifts.

TGV's innovative model represents a positive disruption to the current, sub-optimal Silicon Valley venture capital culture, a topic I have explored extensively in earlier writings. By embracing a global perspective, TGV not only navigates these changing dynamics but also sets a new standard for what startup success can look like in today's rapidly evolving business environment.

Frank and his team at TGV actively deploying capital for Series A/B. Connect with them at https://www.tgv4plus.com/contact.html

Enjoy and always be in the know,

Paddy Ramanathan Follow me on the new X @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, and Spotify)

(Violin piece in podcast, courtesy of my daughter Ilina)

Hi FINTECHTALKERS, (These opinions are mine and not of the guests of my show)

It is commonly accepted wisdom in Silicon Valley that venture capital (VC) portfolio, especially early stage, follow the power law and not the normal distribution - a small number of investments make huge returns whereas a large number don’t even return the invested capital. Given this reality, venture capitalists focus on startups with odds of achieving higher-than-average success, a fact they openly acknowledge. It is frequency vs. magnitude of success or the assessment of that at an early stage. This assessment is very subjective as they prioritize specific trends or ideas simply because they're popular within their social circles or if the founding team has connections within their extended network. Simply put, it is group think with a lot of bias which are not signals of business success or any value analysis. To make matters worse they think this is a strength. Vinod Khosla, a prominent Silicon Valley venture capitalists (VCs) and the founder of Khosla Ventures, candidly admitted to Harvard Business Review that the power dynamic swiftly shifts when VCs become enthusiastic about a startup, particularly if it receives offers from other firms. "The best startups with inspiring entrepreneurs face intense competition for funding," he remarked. However, what is seldom said is that minority founders, such as Black or Latino founders, often do not fit the profile of “best startups” or “inspiring entrepreneurs” due to biases inherent within these elitist capital allocators. 1 2 3.

A living example of this bias is Tope Awotona, the now billionaire founder of Calendly. Awotona, a black entrepreneur from Atlanta (originally from Nigeria), bootstrapped Calendly by draining his bank and 401(k) accounts, according to publicly available news articles and Calendly website (see screen shot below). It wasn't until eight years into his journey that he raised venture capital, Calendly now is valued at over $3 billion (he may have got some seed capital from a local Atlanta Ventures). Awotona likely did not meet the “inspiring entrepreneurs” label for Khosla and his Silicon Valley peers. Mr. Awotona persisted but several others don’t and cannot.

Source - Calendly Website

“I raided my bank account and 401(k) to launch Calendly in 2013. Eventually, I ran out of money and started to seek VC funding. I had a working product, and customers using it, and everyone said no. Meanwhile, I watched other people who fit a different “profile” get money thrown at them for shitty ideas. Those VCs were ignorant and shortsighted. The only thing I could attribute it to was that I was black,” he told media. Tope Awotona as quoted in https://peopleofcolorintech.com/ Emphasis added

Moreover, when a startup garners the backing of VCs, these investors often pull out all the stops to ensure its success. They employ various mechanisms, such as venture debt and mutual co-investments at inflated valuations, practices that go unscrutinized in private markets but arguably should be, especially considering that much of the capital originates from pension funds and 401(k)s. In the wake of the SVB collapse, VCs have lost access to tools like venture debt that were once used to amplify leverage and prop up valuations. This shift demands a more value-based approach to portfolio construction. Previously, VC-friendly banks like SVB facilitated venture debt through concentrated deposits, a strategy encouraged by Silicon Valley VCs who insisted their portfolio companies bank there. I explored this issue last year, highlighting concentration risk and the perils of venture debt as key factors in SVB's downfall. Private investments, especially in early-stage ventures, don't get scrutinized much, allowing for big gambles (unreal valuations) and the ability to influence co-investors. However, if factors such as race are influencing investment decisions, aren't we on a slippery slope? Shouldn't there be more reporting to at least increase transparency? 4

To further illustrate my point, let's delve into the data on VC selections, which underscore how early-stage investment practices of venture capitalists are little more than a glorified lottery ticket selection process, heavily biased against minority founders, particularly Black and Latino entrepreneurs.

The statistics reveal a stark concentration of returns in venture capital investments: a mere 6% of investments, representing only 4.5% of the total invested capital, account for approximately 60% of the total returns. Conversely, about 50% of the companies (around 37% in dollar terms, see graph below) in which VCs invest fail to provide returns greater than 1x. This highlights a significant inefficiency in the allocation of capital and underscores the need for a more equitable and performance-based approach in VC practices.

Source - Correlation Ventures blog post

Many funds underperform, and even the successful ones are burdened with numerous money-losing investments. For example, underperforming funds have nearly 80% of their investments underperforming, both in terms of dollar value and the number of investments. Conversely, even a fund that achieves a 5x return still has over 40% of its investments losing money, which is higher than that of 2-3x performing funds. See graph below. This suggests that the primary difference between highly successful funds and less successful ones isn't superior overall performance across their portfolios but rather the success of one or two high-risk, high-reward investments that paid off significantly - they don’t always but since it is huge factor VCs almost look for that and leave money on the table in the process. This further emphasizes the need for a more judicious and equitable approach in venture capital investment strategies.

Source - Correlation Ventures blog post

Now, let's examine the stark disparity in venture capital allocations to minority founders and the vast opportunities they are uniquely positioned to capitalize on. In 2023, Crunchbase reported that Black-founded startups received a mere 0.5% of the $140.4 billion in VC funding—only $0.7 billion in total. Considering that Black individuals comprise about 13% of the U.S. population, this allocation is woefully inadequate. McKinsey estimates the Black consumer market at approximately $300 billion, presenting a significant opportunity for Black startup founders.

Latinos, who start more businesses per capita than any other racial group in the U.S., fare slightly better but still receive less than 2% of venture capital funding. The total economic output of Latinos in the U.S. is around $3.2 trillion, nearly 15% of the nation's GDP. Latino founders are well-positioned to tap into this substantial market, particularly in sectors like healthtech, edtech, fintech, and eCommerce.

Investing in minority founders represents a tremendous opportunity for investors, especially those building in areas where they hold natural advantages. One of the fundamental principles of successful startup investing is that founders with a personal connection to what they are building have a higher chance of success. By recognizing and addressing these disparities, venture capitalists can unlock significant untapped potential and drive more economic growth.

To summarize, the overall track record of venture capital selection is not impressive. Venture capitalists often fall prey to groupthink, prioritizing specific trends or ideas because they are popular within their social circles or because the founding team has connections within their extended network. This approach has led to significant underperformance in many funds. Meanwhile, minority founders, who have been neglected by the VC community for decades, are uniquely positioned to deliver substantial returns. They have a deep understanding of and connection to the markets they serve, making them well-suited to solve specific problems and capitalize on significant opportunities.

I sat down to discuss all this and what can be done with Linda Haddad, Director and Program Coordinator at Bank of America’s Breakthrough Lab (BTL) - an accelerator for underrepresented founders, Laura Moreno Lucas, General Partner L’Attitude Ventures - a VC firm focused on Latino founders, Stephanie Joseph, CEO of Kura - BTL Cohort 3 member, and Maria Medrano, CEO of Inspirame - also BTL Cohort 3 member. We cover a lot of ground with this all women panel on the reasons and what can be done to raise awareness to this missed opportunity for investors and the community at large. While certain corporations and specialized venture capital firms have started to acknowledge and seize upon these opportunities, there's still ample scope for enhancement, particularly from limited partners and institutional investors, and potentially regulatory oversight, and policy maker scrutiny.

The data unequivocally indicates that venture capitalists are leaving potential returns on the table, failing to meet performance expectations, and disproportionately underfunding minority founders. The temporary surge in funding for minority founders in 2021 has faded, with 2023 investments falling below 2020 levels. This shows that VCs will not change unless held accountable. Limited partners, institutional investors, corporate partners, and the startup community must demand transparency and accountability within the VC industry.

With changing economic conditions, global innovation hubs, and the loss of tools like venture debt, Silicon Valley VCs will find it increasingly challenging to achieve extraordinary 10x returns on individual investments. This situation underscores the necessity for a more resilient approach, focusing on diverse and robust portfolio companies that consistently perform well. Limited partners and institutional investors must recognize this need and act promptly to avoid the risk of diminishing returns from an already struggling asset class. Holding VCs accountable for value driven funding practices is not only a moral imperative but also a necessity for sustained financial performance.

Click here to learn more about BTL and to apply to Cohort 4

Click here to learn more about L’Attitude Ventures

Click here to learn more Kura Technologies

Click here to learn more about Inspirame

Enjoy and always be in the know,

Paddy Ramanathan

Follow me on the new Twitter (X) @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, YouTube, and Spotify)

Thanks to chatgpt, Evita Grant and Eza D’Souza for suggestions.

(Violin piece in podcast, courtesy of my daughter Ilina)

* Venture Capital — We’re Still Not Normal - David Coats

* How Venture Capitalists Make Decisions - HBR

* Performance Data and the ‘Babe Ruth’ Effect in Venture Capital - Chris Dixon,

* The real reason for the Collapse of SVB - Paddy Ramanathan

Hi FINTECHTALKERS, (follow me on Twitter (X)) for real-time discussions on these topics @PADDYRAMANATHAN),

I sat down with Deep Varma, CTO of Alkami (0-41.20) to talk about Digital Banking Solutions and separately with my good friend Booshan Rengachari, CEO of Finzly (41.30-1.13) to talk about Finzly’s BankOS and how he plans to incorporate AI/GenAI.

You don’t want to miss the insights of these technology visionaries building the next generation of technology for financial services.

ICYMI, the two-part series on AI that Elon Musk and Sam Altman appear to be reading and posting about:

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Enjoy and always be in the know,

Paddy Ramanathan

Follow me on the new Twitter (X) @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, and Spotify)

(Violin piece in podcast, courtesy of my daughter Ilina)

Check out some of the new episodes of FINTECHTALK podcasts on AI at Apple, Spotify, or YouTube links below