Hi guys. Welcome to the Fintech Coffee Break. I’m your host, Isabelle Castro.
Today I shared my coffee break with Alex Harris, general partner of Fiat Ventures and founding partner of Fiat Growth.
Fiat Ventures is a VC that strives to invest in companies that provide access to underserved communities and work with an ethos that doing good and doing well is not mutually exclusive.
We spoke about the company’s approach and why Alex felt that VC funding was such a powerful tool to drive positive change.
Isabelle Castro – Hi, Alex. Nice to have you on the show.
Alex Harris – Thank you so much for having me.
Isabelle – How are you today?
Alex – Great, great. It’s been a good start to the year. Kind of crazy times right now, but a lot of good stuff.
Isabelle – Good. I’m glad to hear. So Alex, what gets you up and motivated in the morning?
Alex – It’s a really good question. The technical answer for why it gets me up is typically one of my children kicking me in the head. But I think both the actual answer to your question, and the literal answer is similar.
So our kids will come into bed in the middle of the night and then will kick me in the head. But the actual answer is life is really short. And I want to have an impact. And my kids are kind of front and center of that. And that’s kind of the world we’re building. Everything from, you know, financial literacy that I saw as a kid that I know that the next generation has a lot of problems in inequality and access, and seen in the short time that we have if we can have an impact. So it actually is my kids, their generation, and the kind of the next generation and a lasting impact.
Isabelle – Nice, that’s a good motivation. When did you know that you wanted to start a business like Fiat Ventures, and what led to that decision?
Alex – Yeah, you know, we had an interesting route to how this kind of started. So my background, I’ve been in growth my whole career. Most recently, before starting Fiat, I led paid growth and partnerships at Chime, the digital bank, from series A to series D. And then really had the opportunity to play as part of the partnerships, to get to know all these brands and saw the opportunity to start advising them and decided to make the jump, when I found out we were having one of the violent children that wakes me up every morning, I found out we’re having her and wanted to make the change. So started advising them. And this really grew to the consulting side of our business.
We now have over 30 employees. We’ve worked with over 100 companies to date. And then we had this opportunity. A number of people told us we have this great growth track record. And additionally, the biggest piece was we do the ultimate due diligence because we’re so hands-on with all of our clients. We’re hands-on with analytics and data. So we’re seeing the real data analytics. We’re seeing all different people in the company. We see if there’s dysfunction if there’s great synergy. And then we also are getting that first look. So we see past that data to that data room and a deck. And we’re getting the first look.
So we see there’s an opportunity, this is really working here, this is really unique, this is really unique compared to, you know, other things we see in the market. And so we get a good idea of when we should lean in. So I would say it was opportunistic. And based on our natural strengths and the strengths that we’ve built as a team. And beyond that, it’s, you know, I typically don’t refer to myself as a venture capitalist because I just think of myself as a growth guy. And capital is just a piece of that.
So I’ve always been a growth guy, and I continue to be a growth guy. And as a result of, you know, some of what we’ve done and having the honor to bring incredible people on the team with me. It’s given us this opportunity to start this fun, so kind of an alternative path and one that I feel really grateful for.
Isabelle – You’re doing a lot of really amazing things. How do you think VC funding, specifically, can be used as a tool to drive positive change in fintech?
Alex – Yeah, we’re seeing, you know, especially now, when there is even more of a crunch, and it’s harder to find funding that takes longer. It’s harder to get good businesses funded. And as much as we may not like it.
Reality is if you can’t- In many of these businesses, if you don’t have alternative financing available, if you can’t get a loan or some kind of other financing, many do turn to the venture. And venture represents this opportunity to essentially unlock the opportunity to continue building, whether it is to keep people afloat or pay their bills. While they’re building, whether it is growth, they’re going to funnel it into whatever it is; venture really represents an opportunity to thoughtfully select, what founders are going to be backed, and what businesses are going to be built. And it’s a responsibility that shouldn’t be taken lightly.
Isabelle – No, I completely agree. With your business, you’ve made diversity a core area of your ethos. How has that really shaped the way that you’ve approached VC?
Alex – Yeah, really great question. It’s core to all of us on the team as individuals and then collectively, and we realized we really identify with the mission.
Growing up, we’ve seen several different things happening. We’ve seen financial literacy, being really everywhere, is really quite poor. You’re getting that education from a family if you’re lucky. It’s not coming from our schools. We’re starting to see it now for this next generation in little bits and pieces. With apps and other content, Tik Tok and some other influencer content that’s educating them beyond just the family. We see that this access to information is a huge, huge barrier.
Additionally, we’re seeing access to just having these conversations. It still happens that it’s a game of we’re getting referrals from, hey, you should talk to this person, you should talk to this person. So it’s who you know, and it makes it harder for people who have less availability, less access to that network to break in. So we’ve been making a conscious effort to chat with founders who may not normally have those conversations, and a lot of that still is a product of our network.
People are coming in, but when you say, I’m going to make this effort, it is you expand your network, to a wide set of diverse partners, diverse funds that we invest with diverse founders, this entire network, we build and branch out. And it actually makes it a lot easier to see the tremendous deal flow that we can really invest in some fantastic founders.
Isabelle – And that’s as a result of you making that conscious decision and making that conscious effort.
Alex – Absolutely, we are not technically an impact fund, as far as we don’t have a diversity mandate. We however believe in a few things. And that is one at our core. We want to invest in underrepresented founders. We want to invest in and help build products that work on a more financially inclusive system. We have consciously made that decision. And so as a result of that, we have made that known. And we also make efforts to reach out to the right groups, the right individuals, the right people and encourage others to come in to share their stories with us. So we can empower the right teams. We haven’t put a specific number on it, but we have way over-indexed on underrepresented founders. And that’s very intentional.
Isabelle – What has happened as a result of doing that, both for your business performance or anything else?
Alex – Yeah, I think it’s a few things. One that I’m proud of, I think we see ourselves, you know, at this stage, we have our fund one that we’ve raised, we’re continuing to build our brand. And so we have mentors, but because of our growth arm, and because of the whole pitch of we do the ultimate due diligence, a lot of people look to us as a signal of hey, there’s something here. And we have a wide network of VCs that we love working with. And one big impact is if we’re looking at more of those deals, the wider VC community at least those that we’re connected to, they’re looking at them as well because we’re often encouraging, encouraging that. So I think there’s a role that we play not just in the check we can write. But in the introductions we can make and in the firm’s, we’re proud to co-invest with the impact in terms of performance. We’re applying some of our growth roadmap, our growth tricks, to help some of these businesses really grow and make an impact in their communities.
So I think we see a lot of these businesses really start to make an impact. And that is everything from Copper, which is a bank for teens focused on financial literacy and seeing the impact that that is making, while also unlocking unprecedented growth for them. Market leading growth, we’re also seeing that in products like say, Sigo Seguros, which is insurance in the US market for the Spanish-speaking population. Some major unlocks there. They’re getting explosive growth. We we see these businesses really starting to thrive and are proud of proud of that and proud of the impact until the larger VC community.
Isabelle – Yeah, definitely. A lot of your investments are doing really, really well. Do you think generally fintech is better equipped to fulfill this goal of driving impactful growth and positive change?
Alex – Yeah, it definitely, it definitely is a huge piece of it. These issues are very complex. And, you know, I don’t mean to make myself or the industry itself important or anything like that. But the, the fact of the matter is, the financial system and how we operate is core to how we operate as a society. And it is core to power, to access, to health and wellness, to the betterment of your family, to so many of these huge, huge pieces that really center around money, the movement of money.
Even small examples of, you know, the difference of you have access to credit or you don’t, that can be absolutely massive, what happens in an emergency, what happens with healthcare, what happens in any of these situations where it’s either you have it, or you don’t?
There are huge meaningful life impacts that the financial system can have; building a more transparent system, a more easily understood system, and a more inclusive system, it absolutely plays a major role in that.
Isabelle – And you’re driving that change with your money.
Alex – We’re trying to do our small part and see if we can encourage others to do the same.
Isabelle – Good, good. Have you come up against any challenges in achieving your goals of positive change?
Alex – Certainly, it still is. I mean, there are a few things. One is, there’s a question, are you an impact fund or not? Because there are people who will invest in that.
We want to invest in the best founders and the best businesses possible. And we want to make sure we are taking a look to produce the best returns, right? That’s the name of the VC game. But we want to make sure we’re taking a look at these founders. And casting that wide net to make sure we get, that we have that visibility. So that I think a challenge is – “Wait, are you guys an impact fund?” And we’re saying, “No, we’re not technically an impact when we don’t have a specific mandate. But we are making a huge impact.”
So some of it is actually explaining our stance and what we’re doing and how we’re positioning it. That’s a that is certainly a challenge.
Access to good deals, continues to be a strength of ours. But you know, there’s a lot of founders that we see that maybe are not underrepresented, but they’re still great businesses. And so it’s a matter of balancing that, of course, for the right businesses. We’re investing in those as well, but we’re also looking to see, maybe not underrepresented founder, but maybe there’s a there’s an impact that they’re having in the financial system.
I’ll give you an example. Here.co is allowing fractional investment in the vacation rental market. And they’re the first to allow investment. It’s essentially a security register with SEC for each property for unaccredited investors, which is something that I think is, well, the accreditation system is actually very problematic. And this allows an asset class homeownership, and also the rental market, which has proven to be very strong to be available to everyone, it lowers the access barrier.
And so the fact that it is unaccredited, we loved that it is making this asset class available to everyone for really the first time. So that’s an example of a founder who, maybe, on the surface, is not underrepresented. But actually, the impact of the company is making that impact.
Isabelle – So yeah, so it’s all the different levels, it’s not just kind of from the outset, it’s also what impact they’re making, and therefore you’re making.
Alex – Absolutely, the impact we want to have is not just on founders. It’s ultimately like, how can we make the widest impact possible, which ultimately gets down to kind of the end user of a lot of the products we’re helping build.
Isabelle – Yeah, yeah. Right. Now, obviously, the VC market, there’s a lot of dry powder, everyone’s talking about it. How has the current situation affected you? If it’s affected you at all?
Alex – A lot of conversations with founders, I think we see ourselves as…so we’re in the trenches with founders, we’re working with them, we’re talking to them, we’re friends, we’re partners, we’re therapists, right? We’re whatever needs to be in the moment.
The founder journey can be a lonely journey, fundraising is incredibly frustrating always. And there’s a lot of support for founders to understand you are doing something great. You need to be just a little extra patient in this market, you’re gonna have to have double the conversations. VCs are moving slowly, more than normal, because there’s less urgency to deploy because they know, they know it’s moving slowly. When you look at past years, it was, hey, we’ve got to get our check in quickly. That means extra calls, extra due diligence, and also extra runway that you need to budget for.
So I think that’s the biggest thing that we’re seeing. We’re seeing a lot of incredible deals, especially with a lot of these tech layoffs, we see there’s basically huge opportunity for people to found businesses they’ve been wanting to, and they’ve been waiting for, you know, the universe to give them a sign that this is it. And so there’s a lot of great businesses out there trying to make the leap. So we are seeing a tonne of deal flow. And having a lot of conversations and just trying to do our best to back the best founders.
It is an interesting time. And patience and perseverance is all I can say for founders.
Isabelle – Well, it sounds interesting and exciting for you guys. And it’s difficult for founders, but for you guys, it sounds exciting.
So prior to this recording, you told me about this idea that doing good and performing well aren’t mutually exclusive. Go into that a bit more.
Alex – Yeah, yeah. It’s interesting. It’s, it’s true in reality, and I think it’s because so you know, that the investor generally is looking for opportunity. They’re looking for spaces that are overlooked on taps, that represent big opportunities to capture market share.
What we’ve seen, and you know, numerous examples, including, say, Chime, where I was previously, where you take a population that maybe is unbanked or underbanked. And you can actually build a successful business out of that. Technology is lowering the barrier of access for a lot of companies, and so I think it is possible now.
I’ll give you another example- Bestow life insurance. Bestow and many other digital life insurers have made it so you can apply online in minutes and get an instant policy that’s protecting you and your family.
Previously, that system was, you know, you go to your financial advisor and your financial advisors saying, “Hey, you should get life insurance. It’s a seven-week process”.
Really, what that means is, who’s getting life Insurance, not the people who need it the most, not the people who are really financially destroyed when something like this happens both from health care costs, funeral costs, everything, and lack of future earnings. There’s a huge divide there.
So you’ll see that technology has enabled people to underwrite, in real-time, life insurance policies to lower the access, lower the cost, and make it really accessible to everyone. So that is a huge opportunity because life insurance is a high LTV product. And it’s something that’s very needed to both do good for the world and protect those who need it most with affordable policies and plans like that, and also a tremendous business opportunity to invest in.
You’ll see a lot of these products where there’s just that gap, and technology and change can fill that gap, and they can be quite profitable. So I think there are countless examples of that, where those opportunities to do good and create a great return are, are both present.
Isabelle – Yeah, definitely. In that example you gave, you can see where it would be successful, it makes a lot of sense.
So, looking into the future 50 years, what do you hope has been invented or achieved by them? And what do you think it will take in order for it to happen?
Alex – That’s a really good question. Fifty years is a long time. And we’ve allotted a lot of change in that time.
So I’ll say a few things. Certainly, you can imagine a more financially inclusive system, both in terms of who is invested in how including actually, there are some pieces of accredited versus non-accredited that are in there. And also the impact that these companies are making. I would say one of the biggest is I would like financial literacy to be fundamentally, much better. And I think whether that’s in our school system, or whether that’s Technology that has to force the change, I think that is a huge thing that I would like kids that are born 50 years from now, I would like them to be raised, and as financially savvy as, say, a 30-year-old who’s had to learn it the hard way.
I’d like them to, you know when they’re 16, and they get their first job, and they have to pay taxes on that to under to understand that and have kind of that understanding.
I’d say, you know, VC is interesting. I’d like to see it fundamentally changed in a lot of ways. And there is some inefficiency in building businesses. Founders spending four months out of the year fundraising doesn’t build great businesses. They build in their free time and when they’re not fundraising. So I think there are some things that can change in terms of the way businesses are built, not just the impact they’re making, but in the way, businesses are funded, and how those who are providing capital can provide meaningful, not just an intro here and there, but the meaningful value add to help really partner with businesses to build them.
I’d like to think that we are representing a shift from traditional investment to a future where you can invest capital, and you can invest your time and resources, and know-how and build together and partner with businesses to make a more efficient and more impactful product and a more complete and lasting loop.
Isabelle – Yeah. Well, you’ve got your growth consultancy and your VC, and it does sound like this is where you’re going with it. So kudos.
If you could have lunch with anyone, dead or alive, who would it be? Why And What would you talk about?
Alex – This is a this is something it’s interesting. There are all kinds of answers. Famous answers.
I’d say. My, answer is probably personal. And it’s my cousin, Michael, who I grew up with like he was my little brother. I was so proud of him because he grew up in essentially this culture that we’re talking about this VC culture, a wonderful community, but in Atherton, California, which is, yeah, there’s a lot of VCs in that community. Again, wonderful, supportive community, but he kind of had the pressure, like everyone’s going into investment banking or VC or all these career paths. Instead, he got his master’s in Counselling Psychology, and he chose to focus on adolescent mental health.
He actually interned at an accelerator, and said, “This is not me, this is not the impact I want to make,” and so he made the decision at a young age. And I was so proud of him for doing that.
Unfortunately, he passed at age 26, in an accident. And his legacy lives on in terms of adult and adolescent mental health, we have the Michael Harris Foundation, where we raised a fair amount of money. For that, the Atherton and Menlo community is amazing in supporting that, and our mission. And I’d really like to talk to Michael, not just I’m sure there’d be a certain amount of talking about Giants baseball and, and some of that, but I’d also just really like to talk about, here I am in a career path that he consciously rejected and, and chose not to move forward with. And I’d like to think that we have some of the same DNA, I guess, literally, because we’re blood, but also in the way we think about it. And, you know, he chose to make that impact on the world. And he certainly has and continues to.
I would like to discuss with him what I’m doing, how I’m doing it, what I could be doing better, what I’m doing wrong, kind of sit, sit, and really chat through that. So I know that’s not, you know, a famous answer like he’s famous within our family in our community.
Isabelle – I love that. That is really, that’s kind of one of the reasons why I wanted to do this podcast is to have those kinds of answers. So thank you very much for that.
So you’ve got one more question, which is the curveball question. Which I picked at random using a random picker this morning. What is the best trip for work or leisure that you’ve ever taken? And why?
Alex – The best trip? Vacation or just anywhere that I’ve been?
Isabelle – Anywhere that you’ve been- It can be a vacation, it can be like a work trip?
Alex – Oh, yeah, that’s a really good question. I mean, I like, so my mind comes to, you know, what else 11 years ago from my honeymoon? We went to Hawaii that’s I feel like that’s just a generic, no-fun answer. Right. Like, of course, like, Hawaii is great.
I really enjoy upstate New York. There’s a lot of family history there. My wife’s parents met there when they were teenagers. And they had basically a little area of dirt that they’ve slowly built up to build little structures in the cabins on, and it’s a fun place to be and kind of just be away from everything. And it’s gorgeous and is a great time for, I think, personal reflection and family. And so I’d probably say one of the trips to a town called Long Lake, New York.
Isabelle – I’ll have to check it out next time I’m there.
Alex – Yeah, it’s absolutely beautiful.
Isabelle – Thank you so much for coming on the show and for your answers. They’ve been really, really amazing.
Alex – Yeah, I think thank you so much for having me. This was great. Always happy to chat. And yeah, I appreciate you having me.
Isabelle – You can find out more about Fiat Ventures by going to fiat.vc. You can find Alex Harris on LinkedIn.
So as always, you can reach out and chat with me on my personal LinkedIn or Twitter at @IZYCastrowrites. But for access to great daily content, check out Fintech Nexus on LinkedIn, Twitter, Facebook, or Instagram. You can also sign up for our daily newsletter, bringing news straight to your inbox.
For more Fintech podcast fun, check out the website podcast, where you can find more fascinating conversations hosted by Peter Renton and Todd Anderson.
That’s it from me. Until next time, enjoy your downtime.
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