For the past two years, VyStar Credit Union has been investing in startups, both on its own and more recently as part of a consortium of credit unions.
It's made money on those investments, executives with the credit union said — but more importantly, it has allowed the Jacksonville-based organization to roll out technology that benefit its members.
"We didn't know if we'd be successful in finding fintechs that wanted our investments, or that we'd find fintechs that we would want to invest in," VyStar Chief Member Experience Officer Joel Swanson told the Business Journal on Monday. "Starting the fund was really just a way to signify to the market – and the industry – that we are out there looking for those."
The firm's investments on its own includes a total of about $2.5 million in Payveris CU, a bill pay and money movement provider, in 2019 and 2020.
The credit union received a 220% return on investment after the company was acquired by Paymentus Holdings Inc. in August, Swanson said — and allowed VyStar to roll out quicker cloud-based software, website, bill pay and account transfers for its members.
Several of its investment have been more sizable.
In April, VyStar invested $20 million into Nymbus CUSO, a company it is using to replace its existing digital banking provider that will re-do and its online and mobile banking for members.
"We recognize the importance as a credit union of partnering with innovative companies doing things differently," he said.
In June, the credit union joined with First National Bank of Omaha and a venture capital firm Northgate Capital to invest $18 million in Zest AI, a Los Angeles-based developer of software for credit underwriting.
As part of that deal, VyStar Chief Lending Officer Jenny Vipperman joined Zest AI’s board of directors.
VyStar's individual tech-based startup fund started at $10 million in September 2019, Swanson said. Since then, it grew to $45 million, and now has $5 million left.
Swanson declined to disclose what they'd use the last chunk for, but said VyStar recognizes the growing tech ecosystem here.
The credit union is also part of the Curql Collective, a coalition of almost 50 credit unions across the country that had raised more than $70 million for its first fund as of April — on the path, it said, to raise more than $200 million by the end of October.
"The speed at which Curql completed this first round of fundraising speaks volumes to the credit union industry’s commitment to ensuring our relevance in an ever-changing space,” VyStar CEO Brian Wolfburg said in a statement in April.
The Curql fund has already made five investments this year with plans to finalize two to four more by the end of the year, Swanson said.
Looking ahead, VyStar said it will continue to target innovative startups for its members.
"It's a lot more cost efficient," Executive Vice President Chad Meadows said, "for us to go look at a fintech company that is doing something that we need solved."
