The fintech comeback: Sheel Mohnot on why ‘everything is fintech’ and what’s getting funded in 2025

The fintech investment landscape is heating up again. After a challenging 2022 and 2023, early-stage funding is recovering, with companies focused on practical problems attracting serious investor interest. The shift is toward infrastructure, embedded finance, and AI applications that solve real workflow problems.

Sheel Mohnot has been tracking this evolution from multiple angles. As co-founder of Better Tomorrow Ventures, he’s raised $300 million across three funds focused on pre-seed and seed-stage fintech companies. His perspective comes from building and exiting—he founded FeeFighters, which sold to Groupon in 2012, and ran the fintech accelerator at 500 Startups.

BTV’s thesis centers on what Mohnot calls the “everything is fintech” trend — vertical SaaS companies that increasingly derive revenue from payments and financial services rather than software subscriptions. Toast exemplifies this shift, starting as restaurant point-of-sale software and now getting 83% of revenue from financial services.

Today, we’ll explore why Mohnot believes fintech is back, what types of companies are getting funded in 2025, and his view on AI in fintech — where it’s working and where it’s just hype.

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The big ideas

1. Fintech’s Comeback After the 2022-2023 Crash

“2016 to 2021 was like a straight line upward towards the end it was like, literally vertical. And then it crashed pretty hard in 2022-2023… I would say, like, Q4 into Q1 of this year, they were back.”

The fintech investment cycle has dramatically shifted. After vertical growth through 2021, the crash in 2022-2023 saw generalist funds telling Mohnot they were “not doing FinTech anymore.” But Q4 2024 into Q1 2025 marked a strong return, with Q1 being BTV’s best quarter ever.

2. What Separates Successful Companies: Iteration and Tenacity

“I think it all comes down to a founder and their ability to iterate fast… Are they tenacious? Are they breaking through walls to make stuff happen?”

Mohnot has observed companies go from burning $8-9 million monthly to profitability in five to six months while continuing to grow. The key differentiator is founders who constantly churn out new features, talk to customers, listen to feedback, and iterate the product rapidly.

3. The “Everything is Fintech” Thesis in Action

“We can go by one that everybody knows, which is spend management and banking… then we have embedded… the nature of accounting is changing… AI services as software.”

BTV’s portfolio demonstrates the “everything is fintech” trend across four main themes: spend management (Ramp, Mercury, Coast, Mendel, Relay), embedded finance (Unit for banking, Salsa for payroll, Layer for accounting), accounting transformation (Basis, InScope), and AI-powered financial services (Atlas/Monk, Codge).

4. The Founder Experience Advantage in Early-Stage Investing

“Founders want to work with founders, and especially at the earliest stages… everyone on our team is a founder, operator.”

Better Tomorrow Ventures differentiates itself by having only founder-operators on the team. This gives them credibility with portfolio companies and a higher likelihood of winning deals, as fintech founders prefer working with investors who have been through similar challenges.

Read the transcript (Tearsheet Pro subscribers)

Founder Experience Advantage in Investing

I’d love to start with, like, the fact that you are, you are a founder, you are a builder, and you’ve been an investor for what, like, what special skills do you feel like, the founder experience do you bring to the table when you when you make an investment, when you’re sizing up an investment?

Yeah, I think there’s two sides to it. There’s like, founders want to work with founders, and especially at the earliest stages. I think that’s really relevant, because we’ve either built stuff before ourselves or helped other people build stuff that’s very similar to what all of our companies do. And so I think that that background ends up being super helpful, but it’s not it’s not necessary, but it’s something that we like. So everyone on our team is a founder, operator.

Credibility and Founder Relations

I guess if I’m accepting money as a FinTech founder from Sheel, and you do have that background, like you said, Money is money, but what is it, I guess, from the founders perspective, that says, like, do you help the founders make certain decisions that you had faced when in your investing, in your building experience, yeah, yeah, all the time. And you have more credence by the fact that you have that those those battle scars.

Yeah, yeah. I think some of it, it may not be that my advice is any better than anybody else’s, but they’re more likely to listen to it right and take it seriously. So I think that’s a part of it, and I do think it certainly gives us a leg up where, if we want to invest in a company, there’s a very high likelihood that that company is going to want to work with us, and it’s because we’ve done it before, and we’re focused on fintech. So if you’re building a FinTech company, wouldn’t you want to work with somebody who’s done that before, even if it’s in a different field that but you know, it’s still FinTech and and in every category in FinTech, even if we haven’t built something, we’ve worked with companies that have built something. So it’s been, it’s been great.

Fintech Investment Cycles

That makes a lot of sense, and and you’ve been in it long enough to see the few different cycles that you know FinTech has gone through. Where do you feel we are in the cycle? Like, given what’s happened over the past few years, like, what kind of what kind of environment we’re in? If you if you could describe it?

Yeah, great question. So, look, things were so I started investing in FinTech in 2016 and 2016 to 2021 was like a straight line upward towards the end it was like, literally vertical. Yeah, vertical. And then it crashed pretty hard in 2223 beginning of 24 there was a lot less activity. People really down on fintech. A lot of the generalist funds, the multi stage generalist funds that had built out these FinTech teams, were telling me, just a year ago, they were telling me, oh, we’re not doing FinTech anymore. We’re doing vertical AI or whatever. You know, the next thing of the month is, thing of the year is, and, and then all of a sudden, I would say, like, q4 into q1 of this year, they were back. And fintech, you know, a lot of companies started doing really well. Q1 in our portfolio. Q1 of this year was the best quarter ever by far. And then q2 also has been an amazing quarter. So I think, I think a lot of companies had raised too much money in 21 Yeah, kind of like took you. They took their medicine like got into a really great place from a margin perspective, which wasn’t there at all in 21 because nobody cared about margins at 20, right, right? And and so now fintechs, I think, on the rise, and you see that in the public companies. I think FinTech, over the last year, has done tremendously well. Some companies you know that were left for dead have become again, very successful companies. And I think that’s kind of true across the board in our portfolio.

Multi-Stage Fund Impact

Before we leave the question of investor, investee relationship, like those, those, those multi specialty funds, the big generalist funds, the fact that they kind of left and vacated the space and coming back to it does have any impact on their on their ability to attract good founders.

I think the multi stage funds, you know, like they, they always so we’re talking, what we’re talking about is the series A right that’s the most competitive space at the seed. There’s, there’s folks like us. There are multi stage funds competing. Generally speaking, if we, you know, if we go up against a multi stage, we have a very good narrative that usually wins. So what we’re talking about is generally the series A and it’s very competitive, and you got to do all that you can. And I do think some of the folks who found FinTech out of favor are having a tough time getting back in the swing of things. We didn’t mean that. I think, yeah, yeah, exactly. So I think there is a little bit of that, but I don’t think it’s that big of a deal. Yeah, money is money. At the end of the day.

Attributes of Successful Companies

At the end of your last question, you mentioned the companies that made it through are doing awesome. Can you describe, I guess, some of the attributes of those companies that are doing awesome?

Yeah, I think it all comes down to a founder and their ability to iterate. Fast. You know, is this team constantly churning out new stuff, talking to customers, listening to them, and iterating the product? And then, are they tenacious? Are they breaking through walls to make stuff happen? And I think both of those things are qualities of founders that we really admire and those founders that have been able to make this work. And we have, you know, we have examples of customer of companies that went from burning like eight or $9 million a month to being profitable in the span of five or six months. Wow. And that kind of stuff. It just shows the hunger and will to survive, and, and, and by the way, like they continued growing despite reducing that deficit so much so, yeah, there, there are companies that survive than companies that, you know, I think, in the face of adversity, give up, and fortunately, in our portfolio, we didn’t have too many of those.

Founder Quality Evolution

Have the, I guess, the attributes that that lead to successful leadership. In this case, are you seeing more or less of that? Has that changed over the cycle? I know on this show we’ve had, we’ve had when we when we do interview FinTech founders like you are seeing second time, third time founders come back like people have been through it before. I don’t know if that has any impact on this, but what kind of founders are you seeing out there?

Yeah, I will say, yes. I think you’re right about the second time founder having a different mindset. And we have invested in a bunch of second time founders. I think they’ve like learned their lessons, and then, depending on how successful the first one was, they want to be more successful, which you know, can set a set a nice mark, and they kind of know what they’re doing more. But at the same time, you do have some multi time founders who are used to dealing with, like, starting with a lot of money, because they had a lot of money towards the end of their last company, and they don’t have the right mindset for, like, starting over again. So you have, you have both.

Better Tomorrow Ventures Fund Structure

So I’d love to talk a little bit about your investing. Let’s talk about better tomorrow. Ventures, BTV, what’s the mandate you mentioned? You know, you’re coming in earlier. What kind of check sizes are you writing things like that?

Yeah, yeah, sure. So we are a pre seed and Seed Fund, and our last fund is one 50 million, and we are generally writing checks between, call it a half million and three and a half million dollars. And when we invest in the company, usually it’s just a couple of folks and an idea and a you know, usually they’ve done some sort of prototyping, they’ve spoken to a bunch of customers, but that’s generally the stage at which we invest. Yeah. And, you know, we spend our money and time helping them grow and getting to the next stage.

Investment Strategy and Follow-On Rounds

So you’ll continue investing along in next rounds.

We do, yeah, we we’ve invested in companies up and through the Series C. But more typically, we invest up until the B and that early, I assume you’re leading the rounds as well. Yeah, exactly. So we are with our first check at the pre seeder seed. We are always leading, always or CO leading in some cases. Awesome.

Portfolio Overview and Themes

Can you take us through the portfolio, I guess, thematically like, what are some of the what are some of the themes that that pervade the portfolio, maybe some of the companies that you like? It’s always, I know it’s always hard for investors that have large portfolios that talk about some of the companies, but yeah, if you can name anything by name.

I think the idea of starting by themes is a good one. Yeah, so we can go by one that everybody knows, which is spend management and banking. And we have a bunch of companies in this space. We started investing five and a half years ago, and I think especially at that time, a lot of these companies came into being. So we’ve got a lot of them. So prior to BTV, we were investors in ramp and mercury. Okay, so expense card mainly for startups, and bank mainly for startups and and then we have a company called coast, which is a fleet management company. So fuel fuel spend management for fleets business, so think about ramp, but for Main Street, so your plumbers and HVACs and limo companies, it’s a sneakily large opportunity going up against Wex and fleet core, these incumbents that are, you know, have poor practices and and last generation. Why? Yeah, last generation, exactly. Then we have a company called Mendel. Mendel is a expense card for LA dam. They’re not focused on the startup market. They are focused on larger companies. So they sell into the like McDonald’s, hertz is like those kind telnex, Mercato libre, those types of customers, and they’re doing quite well. Raise the series B. Then we have a company called Relay. It’s an SMB focused Neo bank focused in the United States. They also been recently on the podcast, yeah, oh, cool, yeah, yeah, cool, exactly, cool, cool, cool. So, yeah, yeah. As you probably know, they’re sneakily doing really, really well. I feel like I’m missing one. And then we have a company called portal tres in Brazil, also sort of a similar expense card business in Brazil, more focused on SMBs.

Expense Card Business Thesis

What was it about the expense card business? Was it just that it was antiquated. But what, I guess, what was the thesis moving in there?

Yeah, so I would say, like each of these, there are different reasons to exist, but really antiquated. So for ramp, it was like, you know, it was hard for businesses to get a credit card despite having a bunch of money in the bank and good credit for and there’s a, there’s a big pool of money to be made. And it became easier to build these products as the infrastructure showed up. And that, you know, companies like unit exists that’ll let you build on top of them. So I’d say that is one, one thing that made it easier. And then, as these companies got started, other companies, you know, could build on top of what they built, or could build similar products in a different niche, in a different locale, that sort of stuff.

Embedded Finance Portfolio

So you have the expense card management as one theme. What are some of those in portfolio?

Yeah, theme is embedded. And I know, I know you know this theme well. So in the embedded banking side, we have unit there’s embedded payroll. We have a company called salsa and embedded accounting. We have a company called layer. So all of these companies work with vertical SaaS companies like toast you mentioned earlier, and they sit underneath toast, empowering your toast of the world to do whatever it is. So it could be banking, in the case of unit or payroll, you know, like if you’re a vertical SaaS company selling to, I don’t know, motorcycle dealerships or restaurants. You want your you want to be able to pay your employees through the same port. All. Rather than exporting the information into ADP or paychecks, you could partner with salsa, same thing. Rather than exporting to QuickBooks or having a bookkeeper, you can actually work with layer and then they can do everything within the same product.

Accounting Automation Thesis

That makes a lot of sense. Yeah, that’s an embedded sort of thesis that we have. And then on that last one layer, that brings you to another thesis we have, which is the nature of accounting is changing, and we’ve invested a bunch behind that. There’s a shortage of accountants in this country. It’s pretty severe. And at the same time, you have this unstructured, fuzzy data that if you structure it, you can have technology follow rules, and you have aI surprises the first time we’re talking about it, but we have a few companies working in this space. So we have a company called basis that sells into large accounting firms and automates the work of a junior accountant. Layer we already talked about automates bookkeeping for SMBs, selling it through vertical SaaS. And then we have a company called in scope that automates the work of a late stage private audit. And so that’s that accounting thesis. And then I’d say one last thesis to cover is sort of AI services as software we talked about basis. We have another company called what’s called Atlas, is now called monk, that is automating the accounts receivable workflow for companies. We have a company called codge that’s automating the lending onboarding workflow and some other companies in that space.

AI Application Strategy

So in the AI space, isn’t, is they’re not pure play AI companies, but they’re, they’ve embedded AI into whatever vertical or horizontal that they’re targeting.

That’s right, they’re mostly app layer AI.

Portfolio Size and Investment Philosophy

And so given that that portfolio, how many companies in the portfolio?

Around over 50 now. Okay, awesome.

Future Investment Themes

Where are you looking to invest in the future? Like, what are the themes that you think are investable right now?

Yeah, one thing I’d say is, like we talked about the types of founders we invest in, which is tenacious founders, who will move quickly. I think that’s more important to me than the specific area we invest across betting on the horse, exactly. Yeah, we do invest across areas in FinTech. You know, a lot of folks are down on consumer FinTech, and we honestly haven’t done a whole lot of consumer but we look at that too. So I’d say we are pretty open and not very thesis driven.

Geographic Investment Strategy

And you have a global portfolio, Sheel, do you target geographies or same type of thing? You’re just looking for good ideas and good people to run them?

Looking for great ideas and great people to run them. But I will say, you know, time zones can make things difficult. I have one company in fund, one that’s in Southeast Asia, and I have these board meetings at 11 O’clock once a month. That’s kind of annoying though. You know, it can’t fix the time zone thing with all the AI and zooms and all that, you can’t fix that. Yeah, exactly. But it’s not just the time zone. It’s really just like, how well do we know these markets, and it is hard to get up to speed on a market, and, and, and then I also sort of believe that some of the best opportunities are in the United States. So we mostly invest the United States. We have a bunch of companies in LA dam as well. Brazil and Mexico are markets we know fairly well, and then a little bit in Europe. But the companies we have in Europe are mostly operating internationally. And then, you know, we have some companies in Israel, but those are companies focused on the US market.

Evolution as an Investor

One last question for you, as we get near the end of our conversation, how have you grown? Have you have evolved as an investor over this time period? Oh, man, it’s funny to think about, like, the dumb things I did early on, and now I’m certainly doing dumb things now that in a few years from now, you’ll realize are dumb. But, you know, you had to make those mistakes, I assume, right? Like they were growing pains.

Yeah, yeah. Growing Pains along the way, I would say, you know, it’s, it’s just brought me more and more to a realization of the types of founders I like to back and, you know, mistakes I made early on. We’re not doing enough reference checks on founders. I think investing in some me too businesses, you know, I think there, there are me too businesses that can make a lot of sense to invest in, and then there’s some that don’t, and just sort of figuring out which ones make sense. What else I mean, there’s so many things about running the fund and how to deploy follow on capital, and it’s really about concentrating in your winners. And it you know, you realize that over time, and then you also realize. The power of the power law over time.