New fintech venture capital fund launches for community banks

Advisory firm Hovde Group LLC and the Independent Community Bankers of America expect to reach more than 150 community banks through a recently launched financial technology-focused venture capital fund. 

BankTech Ventures specializes in connecting and accelerating bank technology-focused startups and aims to build a portfolio of tech companies that community banks can utilize for strategic and operational needs. 

 BankTech Ventures is aiming to raise $150 million to $200 million. The service is being introduced as community banks face increasing pressure to adopt a stronger tech platform, especially as the pandemic continues to drive many services online. 

  Tech entrepreneur and fintech investor Corey Ransom has been named managing director. “Community banks are the cornerstone of thousands of cities and towns across the country, and as they continue to evolve in serving their communities, emerging technologies will play a key role,” he said. “I’m excited to join an all-star banking and technology team in launching BankTech Ventures to invest in the next generation of community bank-focused technologies. Together, we will help ensure community banks remain competitive amid a rapidly changing landscape.”

Other general partners include Eric Sprink, CEO of Coastal Community Bank, Everett, Wash.; Carson Lappetito, president of Sunwest Bank, Irvine, Calif.; Steve Hovde, chair and CEO of Hovde Group; Charles Potts, chief innovation officer of the ICBA; and Wayne Miller, executive director of The Venture Center. 

The launching of BankTech Ventures comes as several other groups also launch programs to connect community banks with emerging banking technology companies. Recently, Elizabeth Park Capital Management, Ltd., Strandview Capital and approximately 50 community banks launched a $100 million fund to invest in emerging banking technology companies. Anton Schutz, founder of Mendon Capital Advisors, is setting up a fintech fund to help community banks find new technology for investment and deployment. No more than 40 banks will be able to join the fund as investments will be limited to between $2.5 million and $5 million. 

 Jacobs Asset Management earlier this year launched its own fund, JAM FINTOP Banktech, which already has 66 community bank partners, including Bridgewater Bancshares, Alerus Financial, Blackhawk Bancorp and Heartland Financial in the Upper Midwest.