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Funding the Future of Fintech with Cameron Peake of Restive Ventures

From a crisis you can build something really incredible. In this episode we were joined by Cameron Peake, Partner at Restive Ventures to talk about the ways tech can have a massive social impact and the ways to inspire and acquire funding partners to help make that become a reality.

Payments & Fintech Insights In This Episode

  • Insight into the founder recovery process.
  • The power of incorporating deep operational expertise to protect founders.
  • Understanding the shift into increased regulation
  • The importance of a nimble nature to architecture to be able to adapt to multiple banks.
  • And so much more!

Featured on the Show

Episode Transcript

Heather: Hi, everyone. Welcome to PayPod. I’m your host, Heather Bodie. And today we are going to be talking about funding the future of FinTech. Joining me today is Cameron Peake, partner at Restive Ventures, a company focused on helping founders build the future of financial services. Cameron, welcome to the show.

Cameron: Thank you. Great to be here.

Heather: Absolutely. So to kick us off, give us the inside scoop. What was your path into VCs? How did you get where you are today? And a little bit of your love for FinTech. Just give us sort of the inside scoop.

Cameron: Just that little sprinkle there as well.

Heather: Yeah, just a little sprinkle.

Cameron: Sure. Yeah, I actually, I’m sure many of your guests have said that, started at FinTech before it was called FinTech. And I had kind of an unusual path. I started actually in emerging markets. I worked at an international development agency and kind of came in as a generalist but pretty quickly realized that my brain thought in more of a business and financial way and a tech-enabled way. And so I ended up joining a team that was committed to launching companies that had a massive social impact in emerging markets. So, at the time, what we found is that most people still today are willing to pay for safer ways to store their money, more convenient ways to store their money. And so that meant we launched a lot of financial services businesses. So we did everything from create a wholesale microfinance bank in Indonesia to a mobile money payments product in Zimbabwe.

I did something else in Haiti and the Philippines, so a ton of financial services work all over the world. I’ll come back to kind of my love of FinTech around that in a moment. But did that for a number of years. Ended up realizing one minute, there was this sexy thing called FinTech, that there was a lot of innovation going on closer to home. And so, I eventually focused my efforts more on the U.S. I actually went to Wharton where I was part of the group that started Wharton FinTech, which has become a brand in and of itself. And then I started Azlo from there, which was a digital bank for small businesses. So, I grew that to about 150 employees, nearly a billion dollars in deposits, and was doing that for about six years. I stepped back from Azlo about a year and a half ago at this point and spent some time doing standard kinda founder recovery process but also advising FinTech founders and realized that I just loved the advisory side.

You know, helping founders navigate some of the same challenges that I saw. And decided to really double down on that and, and joined a VC with that in mind. So, I joined FVS, Financial Venture Studio, one, because I’ve known the team for a long time and it was a group of great people, but their thesis is really around providing early-stage capital and deep operational expertise to FinTech founders. And that really aligned with how I thought I saw some early success and just what I was really passionate about.

But going back to your first question around why FinTech, my first flavor of FinTech was in Haiti after the earthquake, and I think it was in 2010. And we created an entire mobile money ecosystem. I think it was the first mobile money play in the Western hemisphere where we enabled patients to basically do something called “Cash for Work.” So, you see that a lot of time after disasters, they’ll get paid to clean up debris or other things in an effort to stimulate the economy after a disaster. And we decided to do that via a mobile money ecosystem to kinda leverage that cash infusion and jumpstart the system. And I saw the power of being able to keep your money in digital form, so not buying goats or storing it under mattresses, and the power of convenience. And I was really just hooked after that.

Heather: Oh, my brain just went in so many different directions trying to imagine those early days of that work but all the way through to the realization and watching it actually impact people’s lives in such a significant way. That’s incredible. That’s really, really cool.

Cameron: Yeah. Yeah, it was a pretty amazing introduction to the impact that FinTech can have, and you know, I kind had pulled that thread all the way through today.

Heather: You used the phrase, “Standard founder recovery process.” Can you give us, I don’t know, just a little bit of insight? I know a lot of folks who are listening are either in that seat right now, founders at early stages but also founders a little bit later in the game, and also individuals who are looking to take that leap, take that entrepreneurial step outside of whatever organization they’re in. So, can you just give us a little bit of insight of what that was like for you, and specifically around the recovery process? Because there’s this idea of the big win, but exit and post-exit can be something we don’t talk about a lot.

Cameron: Yeah, for sure. Anyone contemplating it, I think it was just one of the greatest learning experiences I’ve ever had in terms of discovering yourself, leading teams, I mean, everything falls on you just in a way that is unlike any other. And so, like anyone contemplating that jump, I highly recommend it. Again, it was the hardest thing I’ve ever done in my life and one of the most impactful things. So, you have to have the mental fortitude to gear up for that ride. But I also found it a pretty deeply introspective journey in terms of understanding your own leadership and your own values because you’re ultimately building an entire company and attracting a team based on that, right? And so, it just forces that level of reflection that you don’t typically have to have in any other role. And so, again, I found that entire journey just incredibly powerful.

And then on the recovery side, just kind of level of exhaustion that you experience having a company and a team. And in my case, again, it was 150 people, but, more or less, it can be equally as both challenging and rewarding. But carrying that, there’s just a lot. And so, I think someone said, “The number of years you have been running a company is typically the minimum number of months that you need to recover.” So, in my case, that was about six. And I found that to generally be true, but oftentimes founders go into, you know, either into a beach or into hibernation mode, and spend some time doing introspective stuff and I’ve actually found two different paths. Like some, just wanna completely disconnect, and I was absolutely in that path. I just felt like I needed to recharge my batteries.

My husband had been running a company and he stepped back at the exact same time I did, which was pretty cool. But, he was kinda the opposite in the other flavor of founding VC, which is, you’re feeling really antsy and you wanna jump into the next thing. And I found it really interesting because, with him, it took him about three months to get to the point to realize like, he was deeply exhausted and needed that recharge. But if I hadn’t been there to anchor him, I think he would’ve jumped into something and not really taken that time to reset.

So anyway, I think regardless of the profile that you are, that time to just recharge, become refreshed, like, really think about where you wanna dig in, if you have the luxury of doing it, I think it’s really important. And then you often see this…I kind of joke about the standard set, but you know, you step back, you take a little time to recover, maybe you do some angel investments, some advising, kind of help out with dabbling a little bit, and then you typically jump into something, again. I definitely followed that path, and my jump ended up being VC, but you often see people going into other startups or doing other things as well.

Heather: Well, let’s shift to the VC conversation as an individual. I am not a tech founder myself, so, I find that this is like a gap in my awareness or my understanding of the process. But, can you give us a little window into the process of securing VC investment as a founder, as somebody who’s launching, maybe either in their series A round of funding?

Cameron: Sure, yeah. Maybe I’ll give you a little bit of a taste of where we place. I can definitely speak the most to…we do…I’ll tell you about FVS and then I can definitely speak to seed, which is typically the funnel into the rest of the process.

Heather: Beautiful.

Cameron: So, Restive Ventures, we are a pre-seed and seed-stage FinTech fund. We take a pretty broad aperture to what FinTech is, so that’s everything from your neobank and payment companies to other companies that view FinTech as a major vertical. But, we provide early capital and deep operational expertise alongside that capital. And if you think about FinTech, I know all your listeners know, really challenging industry, kinda hard to get something off the ground, especially if you’re coming into FinTech for the first time, or maybe you’re a first-time founder. So, we both provide deep operational support in whatever needs the company has at that point in time.

So, we’re almost like an extension of the management team. All of the partners are either former FinTech founders or senior operators, and that can be everything from, how do I think about my go-to-market, my first hire? How do I think about fraud? And then we run a more structured program as well where we’ve identified what we think are the most important things to launch a company within the FinTech space, things like regulation, partners, investors. And we make one-to-one connections with folks in the industry, or bring in other founders, kind of fireside chat style, to talk through their experiences. And again, the idea is to cut through the learning, the noise, the connections that can take a long time to develop in FinTech, expedite those so that you can launch and grow more quickly.

So, we see companies as early as they haven’t even incorporated yet, maybe they’re a strong team and a strong idea, all the way through to companies that maybe have some revenue on the books. But in terms of the process, typically it’s, you know, maybe I’ve been working for a few years, I have a really strong idea about how I can change the world and I wanna get started. And, kind of depending on your profile, I’ve seen companies or people basically quit their job on a Monday and have funding by Friday. And usually, that’s a pretty exceptional case, right? Like, that’s usually someone who started a company before, had an exit, and has a pretty strong point of view. But it definitely happens, all the way through to, maybe I have a small team and I’ve had some traction in revenue.

But the way that it typically works is you’ll get intros via your network, start to build up some conversations with investors. In some cases, you’ll take angel funding first, which means that maybe some former executives at a company you’ve worked at that know you well, or other folks in the FinTech space, kind of the general somatic area, may provide some small checks. Kind of, get that early money where it’s all about the person, and the believability of the vision. And then as you get more traction, you’ll speak more to kind of institutional funds. So, at this point in this cycle, most of them are looking for some level of revenue. It used to be very growth-focused, but revenue is becoming increasingly important. But, they’re just looking for a signal that you can execute and that you’re de-risking some of the challenges of an early-stage startup. So can I execute? Is the market starting to respond to my product? Are users liking it? Can I attract a team? Can I attract some initial capital?

And so, the more that you can answer some of those questions, the more, one, kind of later stage institutional ventures will come in and, two, the larger amounts of money that you typically get. But at the stage where we operate, at the seed stage, it’s network, it’s reaching out, oftentimes it’s having initial conversations about where we might be perceiving the risks. So, the statement might be, “We’re not gonna invest now, but we would love to stay in touch and kind of see how you progress against some of the goals that you’ve outlined.” And then we typically funnel through to those downstream funds that will feed into your series A, B, C, and beyond.

Heather: Speaking of mitigating risk, especially in FinTech, you know, it can be incredibly complex for FinTech companies that operate under sponsored banks. Can you speak a little bit to the ways that they can mitigate that risk and avoid ramifications? I know you have a recent interest in public awareness around the broader regulatory concerns around FinTech. Is there anything, in particular, you wanna share with us around that?

Cameron: Yeah, I think everyone’s seen the headlines around increased regulatory scrutiny of FinTech in general. And a couple of years ago, it seemed like the general tone was much more around innovation, and it’s shifted. And I think we’ve seen that through both public decisions around Digit and some UDAAP fines that were issued. And then more recently, the OCC recently kinda made a decision around Blue Ridge Bank to increase their compliance operations and just put more boundaries around their sponsor bank model. So we’re definitely seeing a lot, lot more scrutiny around that, that sponsor bank model. And if you think about it, sponsor bank models have just exploded over the last couple of years. And so it makes a lot of sense that regulators are gonna wanna pay more attention to it, right? I mean, it’s a very different way of dealing with vendors and kind of dealing with banking services.

So, one thing that I developed and the rest of the team developed was, how can founders respond to this? It can feel pretty challenging for big macro things that are seemingly outside of your control, how you could deal with that today. And so, a couple of things that I’ve learned in my experience…we are running a neobank, it was very highly regulated. So, a couple of things that we did that I think would be helpful for founders looking at this environment. One is to make sure that everything is very clearly documented, that you have clearly-documented policies and procedures and that you’re actually following them. And these policies and procedures are often the starting point for any sort of investigation on the part of regulators, or any sort of health check on the part of a bank. To examine those policies and procedures, make sure they’re in line, kind of in written form with broader regulations, but then also making sure that you’re following through on stated procedures. Because oftentimes the challenge comes down to, I have something written, but I’m not actually following through.

So, one thing we always advise, FinTech is not just this exercise in checkboxes, it’s actually an operational blueprint. And so, make sure that you can commit to what is written and, in the first place, make sure you have something written down. And then a second important thing is, you think about the sponsor bank model in particular, is making sure that you have some level of redundancy built in. And if you’re really early, it’s gonna be close to impossible to secure multiple sponsor banks, like, your volumes are just not high enough. But you do have power as you think about how to architect your system to make sure that it’s easier to swap out multiple partner banks. And so that involves making sure that your architecture’s not developed just with one bank in mind, it’s not too bespoke. It’s typically involved having APIs built out as opposed to any sort of direct connection. But that’s a really important plan. And if you are bigger, thinking about redundancies.

And then another area that we’re watching and we’d expect more scrutiny, and it’s been going on for a while in the background, but it just has increased attention over the next couple of years, is around data privacy and security. That’s making sure that you’re doing the right things in terms of basic pen testing and ethical hacking. But, there’s also a lot of vulnerabilities that I’ve seen around 2FA. 2FA is obviously very important and fairly common at onboarding, but if you think about the full customer life cycle, things like a change of address, and change of demographic information, you wanna make sure that that’s pretty tight too because that’s kind of a backdoor vulnerability, account takeover, and making sure you’re protecting it more broadly is, again, another theme that I’d expect to see some more attention around. So, those are a couple of things that founders should be looking out for. I’ve profiled a number more in our blog post that you can find at finventurestudio.com. But there’s, again, a number of practical things that founders can be doing today to feel kind of more in control of their destiny in the face of this changing regulatory environment.

Heather: There’s a couple of things that you said that popped out at me. One is this, even though it’s…what I’m about to say isn’t all that technical, but this idea of when you’re starting anything, if the goal is for it to grow, make decisions as though it were already at the size you dream it to be as far as like policies and procedures, and the way you document things, and file naming, and all of that.

And then the second thought I had was just this, I think, sort of cliche culture to startups in general of “Move fast, break stuff,” you know, and the, “Get stuff done and get it done now.” A lot of times I’m talking to founders who have this sort of common thread of advice of, like, it doesn’t have to be right, it doesn’t have to be perfect, it just has to be done and we’ve gotta move forward. And when you’re in that mode, I can imagine there’s a vulnerability there for these policies and procedures to really truly become an exercise in check boxes and not, like you said, an actual foundational operational plan.

Cameron: Yeah, exactly. Well, and I will say like the one thing that we did, and I see some founders doing on the policies and procedures is, there is a happy medium between, “I’m a massive company at scale, and I need to be following all of these bigger banks or bigger institution policies.” You can risk box things, but that should be reflected in your policies and procedures. So maybe, my vendor management program kicks in at X threshold…and again, you can kind of construct things in a way that’s risk-managed, but again, it needs to be written, logical, and you need to think about where you are on that broader trajectory. But that goes back to making sure that they’re possible to implement today because someone may be advising you to do something that’s just not possible at an early stage. And, it’s much better to talk about how you’re risk dating certain factors and have it written and actually follow it, as opposed to just doing the checkbox and not doing anything at all. I mean, that’s much, much worse. So, there’s a lot of just very practical things that founders can be doing today where you can be compliant, you’re not gonna kind of come across any bigger issues, but you actually need to truly intend to do it as opposed to having it be a checkbox thing.

Heather: As we get down to the final minutes of our conversation, I’m feeling curious, is there anything you can let us in on, on current themes that you’re seeing in FinTech? And tie that to what it is you are looking for when you sit down with a founder or a small group of founders who are looking for that VC investment.

Cameron: Sure. I mean, the short answer is, for us, we follow founder energy. And so, where founders are passionate about something, we will support them. So, some funds come in with, I wanna just look at B2B SaaS or something else, and we don’t have that kind of top-down view. So the short answer is, I’m happy to talk about the trends, but where the trends are, are where we’re very happy to meet founders. The big thing that I look for is, is it a strong founder with a vision, and can I believe that they can execute against that vision. And there’s certain themes that have a higher threshold to get over. Like for us, a lending business typically requires, kind of, something extra, something special. So there’s certain macro buckets like that where it’s a little bit harder, but in general, we’re looking for strong team vision and we believe that they can get there.

In terms of trends that we’re seeing, we’re continuing to see…this should be unsurprising to your listeners, we’re continuing to see a lot in the Web3, kinda Web 2.5 space, despite the broader downturn, there’s still a lot of founder energy there. A lot of people are really excited to play in a completely new paradigm. So, I just continue to see more and more interesting companies come out in that space. We’re seeing a lot just in SaaS in general, you’ll just see that the market is really rewarding SaaS businesses as opposed to kinda interchange-led businesses. So, if this is where founder energy chases VC demand, like a lot more B2B and SaaS companies are on the upswing.

And within that, I’m seeing a lot around what I call verticalized finance. So, specific industries where maybe they haven’t been open to FinTech or digital solutions in the past, they now are. So we have one company that’s digitizing paper check payments between school districts and their vendors. And again, I think five years ago there would’ve been very little appetite for a digital solution there. But I think as FinTech has been more broadly adopted within the broader consumer space and within many B2B spaces, some of these more legacy industries are now open to new innovation, and I think that one is really exciting.

Heather: I could not agree more. And I had a conversation with someone recently who was sort of downplaying the…you use the word like sexy nature to payments, like it isn’t all that sexy, and I argue the opposite. It’s an intrinsic part of every single day of our lives. We’re constantly transacting, and the movement of money is, for better or for worse, what makes our world go around. So, I think it’s an incredibly important innovation, and I’m excited to see all of the stuff that comes out of it.

Cameron: Yeah, me too.

Heather: So I’d like to close out our show the same way with all of my guests. And I’m particularly excited to hear from you as having this founder journey and then now transferring over and being on the VC side of things. What’s the best piece of business advice you ever received? And if you can remember, from whom?

Cameron: Well, this should be not surprising given how I talked about kind of my early career. It’s, with big crisis lies opportunity. And so that was, it was kind of a pervasive statement at the International Development Agency I was at, but the belief was, for them, it was post-disaster, like a hurricane or earthquake, there’s a crisis. But from that, you can build something really incredible. People are more receptive to change and are kind of willing to galvanize around something. I’ve seen that happen again and again. For me, one of the best examples of that was with our company, with Azlo. Post-COVID, we were working with small businesses and that industry was just devastated. And we saw an exponential increase in terms of new businesses that were created coming out of these personal crises of getting kind of laid off because people saw it as an opportunity to unlock passions that they’ve always had, right, “I’ve always wanted to be an entrepreneur, but I never had the push.” And so, we saw that both within our customers, and for our company, I saw the team come together post-PPP, the loan program.

Heather: The loans, yeah.

Cameron: And, we built a system for our customers within one week. I mean, people put in so much passion and energy to help these small businesses out. And so, I’ve just seen that crisis happens, people come together in this incredible way and you produce these amazing outcomes. And so I’ve just seen that play out again and again in my career. It’s pretty interesting that it was rooted in things like earthquakes, or natural disasters, but you actually see it play out in the business world as well.

Heather: Cameron, thank you so much for joining us today. If folks wanna get in touch with you, or learn more about FVS, where should they go?

Cameron: At finventurestudio.com, or I’m very active on LinkedIn, so feel free to reach out there as well.

Heather: Thank you so much for joining us, I really appreciate it.

Cameron: Thanks for having me.

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Industry Spotlight

Restive Ventures

Restive Ventures is on a mission to help entrepreneurs build the world’s best fintech companies. We provide the foundation of early-stage capital, deep operational expertise, and systematic connections to help founders launch and grow more quickly. Restive reflects fintech founders inability to sit still – the entrepreneurs and visionaries that want to get something done, and often don’t rest until they do. Restive is committed to financially and operationally supporting founders that are driven, innovative, and ready to change the world.