After two decades in the fintech space, Arlington-based First Rate is looking to help early-stage startups break into the industry.
With plans to invest $25 million over the next three years, the wealth management solutions-focused financial software company has launched a new corporate venture arm. First Rate Ventures will help others scale through funding and its network in the industry, said Managing Director Marshall Smith.
“We want to do business in new market segments and believe backing early-stage disruptors will enable us to have a better way of doing that,” Smith said via email.
First Rate Ventures is targeting startups across North America, Europe and Asia focused on things like ESG, artificial intelligence and blockchain amid a range of niches within the financial technology space. It plans to lead seed-stage rounds between $500,000 and $2.5 million in post-revenue companies with up to $1 million in annual recurring revenue.
Earlier this week, First Rate Ventures unveiled its first investment, leading a $2.3 million seed round for Arlington’s ICR Partners, a tech-enabled investment manager research provider founded by former First Rate account executive Bob Mehringer.
In addition to financial backing, Smith said First Rate is able to help companies through introductions to its network of more than 500 banks and wealth management firms, which it says combined have more than $2.4 trillion in assets, and access to “Tier 1 bank data security infrastructure.” First Rate, which Smith said does more than $23 million in annual revenue, has more than 100 employees with additional offices in Hong Kong.
“First Rate can… slingshot startups to doing business with large banks,” Smith said.
Outside of venture capital investments, First Rate has also been making acquisitions. In May, the company scooped up financial services company Vantage Software for an undisclosed amount.
“We decided that a proactive corporate venture capital strategy, investing capital off our balance sheet would add new lanes of growth to our wealth-tech business,” Smith said.
Aiding Smith in the launch of First Rate Ventures is Prabhakar Reddy, who is serving as a strategic advisor. Reddy is the co-founder of Irving- and India-based VC firm Naya Ventures, which rebranded to Dallas Venture Capital last year, and founding partner of the Southlake strategic investment firm Stride Growth Partners. Reddy also serves as an operating partner and board member for Irving AI health care platform FelixHealthcare.AI.
“First Rate Ventures is ultimately about investing in innovative firms that share our mission to help promote stewardship and growth,” Smith said in a statement. “We will aim to deploy capital in a redeemed fashion, focusing on not only the entrepreneur but also the community they do business in.”
