Joe Maxwell and his crew of tech investors at Fintop Capital, a Nashville-based firm with a St. Louis office, have corralled $200 million in capital. It's the third and largest round of venture capital they've raised since forming their company six years ago.
Fintop Capital already has tapped a bit of that money to back Ann Arbor, Michigan-based Plinqit, a savings app that pays users to learn about personal finances. It's the first of eight to 10 investments that Maxwell, Fintop's managing partner, expects to cement this year.
"We're off to the races," Maxwell said in an exclusive interview.
Fintop, which spun out of St. Louis-based venture capital firm Cultivation Capital, counts among its general partners St. Louis investor Rick Holton Jr. and local entrepreneur Jim McKelvey, co-founder of payments company Square. One of Fintop's portfolio companies is Denim Social, a St. Louis startup that provides social media management tools for financial services firms.
Fintop's new dose of capital is among the larger raises for a Nashville-based investor in recent years. It's also notable because Fintop primarily targets companies outside the region's legacy health care sector, which attracts the lion's share of venture capital and investor interest. While some Fintop-backed companies are in health care, the firm's main focus is finance technology software startups whose customers are other businesses, not general consumers.
"As we lean into a world of embedded banking and embedded payments, you'll see fintech meet pretty much all businesses," Maxwell said. "There's a convergence happening that makes fintech even bigger of a market."
Why now?
Fintop raised $126 million in its most recent round and used it six to eight months faster than anticipated, sparking the need for the new round, Maxwell said.
"We've got a lot of really great deal flow right now. You don't want to have a pipeline and say, 'You've gotta wait until we're finished fundraising,'" Maxwell said. "You never want to be out of the market."
The vast majority of the $200 million came from existing investors, Maxwell said. Fifteen percent of the money came from Nashville-based investors.
Where to?
Most Fintop-backed companies aren't based in Nashville. Several of them are, including Kindful, which was acquired one year ago, as well as Franklin, Tennessee-based Core10 and also Fresh Technology, which evolved out of Nashville-based restaurant business Fresh Hospitality.
"We'll clearly look locally if we can, if companies qualify and fit our thesis. We've very committed to increasing the ecosystem for high-quality fintech companies in Nashville," Maxwell said. (He also personally backed and recruited these sales software entrepreneurs to bring their startup to Nashville).
"Quite frankly, there are some great ones here that are crushing it … Built and Alto, they're national eye-poppers," he added. "Building a fintech company in Nashville is not as hard as many people think. There are resources here."
And what is that thesis Maxwell mentioned? "Capital-efficient operators building B2B, SaaS [software as a service] fintech companies. The capital efficiency is the big one: They're demonstrating that our capital, plugged in for growth, can expand on the growth they've already created," he said.
Fintop's rounds
Fund I (2016): $50 million raised; 13 investments; six exits, including Nashville-based Kindful
Fund II (2019): $126 million raised; 20 investments; one exit
Fund III (2022): $200 million raised thus far; on pace to make eight to 10 investments this year
