Featured Guest: Sheel Mohnot

Sheel Mohnot is Co-Founder and GP of Better Tomorrow Ventures, a seed-stage venture capital fund investing in fintech companies globally. His own startup experience includes 2 successful fintech exits — a payments company and a high-stakes auction company — and he’s GP of the 500 Fintech fund. He formerly worked as a financial services consultant at BCG and started his fintech career at the non-profit p2p lender, Kiva.

Episode Transcript

0:00 – [MUSIC PLAYING]

0:03 – Sheel Mohnot

There are a lot of things that we as consumers go through that feel like they could be more efficient. And I thought, let me dedicate my career to this. And I think there’s a big opportunity there.

0:19 – [MUSIC PLAYING]

0:21 – David Reiling

Welcome to the NextGen Banker Podcast where we explore what’s next in banking and talk with the innovators responsible for creating positive change in the financial sector. I’m your host, David Reiling, and have a big treat for everyone today. So we’re going to welcome Sheel Mohnot. Sheel, thanks for being on the NextGen Banker Podcast.

0:39 – Sheel Mohnot

Thanks for having me. It’s good to be here.

0:41 – David Reiling

Cool. And just a little reminder for our audience, hang out at the end of the episode. We have a musical feature at the end of each episode covering a wide genre around the globe in terms of music. We have some pretty cool features, in my opinion. So remember to check that out.

0:58 – David Reiling

And so Sheel, co-founder Better Tomorrow Ventures, a venture capital firm investing in fintechs. You worked as an investor in fintechs for the past eight-plus years, as far as I can see. And before that, looked like you worked on maybe your own venture in terms of thistle in the plant-based healthy food industry.

1:20 – David Reiling

And obviously, you’re no stranger to podcasts and I have to mention the Pitch podcast because I’m hooked. I am hooked. I started listening to it when I found out– learned about you and the podcast. And I’m having a blast with it. So I know it’s a shameless plug, but it’s coming from an authentic place. So it’s really fun to hear. So that’s cool. So just a little dive into your journey as to how you got to fintech. You didn’t start out obviously in this industry. So what drew you into this crazy world of fintech?

1:52 – Sheel Mohnot

So I started my career in fintech, actually on the nonprofit side. So back in 2006, I was a– 2005-2006, I was a management consultant and wanting to do something different. I saw this cool, new idea for a website that let individuals in the developed world make loans to individuals in the developing world for the sake of alleviating poverty. And it was called Kiva, kiva.org, K-I-V-A.

2:23 – Sheel Mohnot

And I thought, this is really cool. We can really help people. And you can do so from the comfort of your home. And it’s a fun, addicting thing to give people a small amount of money towards whatever they’re trying to do. And you can be really catalytic to their lives. So you can help them buy an irrigation pump for a farmer in Uganda, that kind of stuff. I didn’t think about fintech at the time. And actually, very few people did in the word. It wasn’t really very–

2:58 – David Reiling

It wasn’t coined yet.

3:00 – Sheel Mohnot

–as you know. But that was my first foray. And after doing that, I ended up back in consulting. I was a BCG serving financial institutions. So I was working with banks, insurance companies, payments companies, that sort of thing. At that point, I thought, OK– that’s when I thought, man, there’s a big opportunity here.

3:26 – Sheel Mohnot

Financial services are like 20% of global GDP and it’s a inherently digital thing. It’s numbers. And so the merger of finance and technology is sure to come, but it hasn’t yet. And there are a lot of things that we as consumers go through that feels like they could be more efficient. And I thought, let me dedicate my career to this. And I think there’s a big opportunity there.

4:02 – David Reiling

That’s fantastic. And I totally understand the addiction and fascination with Kiva at the time. I have to admit, I was in the same type of camp. Especially, in my opinion, harnessing the power of that technology to do good and letting everybody participate. I mean, you can basically democratize good and give them a platform to do it, and put their money where their mouth is in such a way. I thought was great. I thought that was fantastic.

4:32 – David Reiling

Take us on a little journey with your perspective. So going back from, let’s say, the Kiva days forward, I’d love to get your perspective on two things. One is the journey that we’ve been on relative to fintech. And particularly, where do you think we are today from an investor perspective, right? I’d love to hear that secret sauce.

4:50 – David Reiling

But you have a global mindset, and I would love to hear where you see fintech around the globe, compared to the US, I suppose? What does Asia look like? What does that Africa look like, compared to the US? But let’s start with this fintech, particularly on the investing side, past and present. What do we look like?

5:10 – Sheel Mohnot

So I mean, as we talked about, fintech wasn’t really a thing 15 years ago. The word really started getting used about 10 years ago and really has grown significantly. And we were on a pretty straight line upward trajectory, I would say, from about a decade ago until 2019. And then in part, due to COVID and zero interest rate environment, we really spiked and spiked hard 2020.

5:48 – Sheel Mohnot

2021 was just wild. Every one of our companies was raising money at some just absolutely bonkers evaluation. But also, they were doing well. They were selling– many of them were selling into other fintechs who had also raised money at a crazy– so these companies were doing just super, super well. But also had raised too much money. And in some ways, it felt like when everybody becomes a fintech investor, that’s actually bad for the sector.

6:23 – Sheel Mohnot

There’s a bit of prisoner’s dilemma where you don’t want everybody to do it because it becomes a crowded trade. And in our world, a crowded trade, an example would be, I’m building a company– or we invest in a company, let’s say. Then instantly, there are like four or five other companies doing the exact same thing. And they’re all well-funded, they’re all great entrepreneurs or good entrepreneurs at least on paper.

6:54 – Sheel Mohnot

And what that means is it’s just harder for any one company to be successful because you’re selling into the same customer set, and it becomes very hard. So now, we went from being the Belle of the ball two years ago to falling completely out of favor. And it happened rapidly.

7:18 – Sheel Mohnot

There was this whiplash from 2021 to 2022. And I’d say I’m still as excited as I was a few years ago. Probably not as excited as I was in 2021. I think, like a lot of folks, I thought, OK, man, we are– as an investor, we’re geniuses. Everything we invest in turns to gold. And of course, that’s not really true.

7:48 – Sheel Mohnot

But I think the things I believed then, which were what we talked about– financial services are inherently digital. They’re still not as touched by technology. There’s still opportunities to improve. All of that stuff remains true. And so I’m excited. And I think really the way to look at it was just, we had a two-year blip. 2020 and 2021 were just this crazy blip, and we’re reverting to the mean, which is an upward trajectory.

8:24 – Sheel Mohnot

And I think there’s that famous chart of e-commerce growth where you’re on a line and then it’s this crazy upward slope. And you could have invested thinking that upward slope was going to continue trending upwards. But the reality is that 2020 upward slope did not continue turning upwards and we’re on the same upward trajectory that we were at 2018-2019. So that’s how I feel.

8:51 – David Reiling

Don’t you think– I mean, as maybe painful as it is to experience, but you shake out a little bit of the crazy or some of the irrational money. And now, you’re a little bit back on– I would agree with you. I think there’s just enormous opportunities. And the question obviously, which are the right ones? But it seemed to be getting a little out of hand. Like anything with a business plan seemed to get funded. So it seemed a little irrational to me. But backseat driver.

9:21 – Sheel Mohnot

Definitely seemed irrational to me too. Not to say that we don’t have our own irrational companies in our portfolio. We do. But I think largely, we stayed largely sane.

9:36 – David Reiling

Now, that’s great. So let’s just take a lens. Let’s just zoom out a little bit from a global perspective. Again, you just from your view, how does fintech in the US, in your mind, compare to Africa or to Asia? I’m just curious. I’m always curious. It seems like they’re moving faster, and I’m always like, what can we do to move faster?

9:58 – Sheel Mohnot

Yeah, they are moving faster. Africa and Asia are different. Let’s start with Africa. In some ways, here, we’re constantly telling regulators like, there’s too much regulation on what we’re doing. It’s funny. In Africa, it’s actually the opposite. There’s not enough speculation.

10:21 – David Reiling

Yeah, we need some guidelines.

10:22 – Sheel Mohnot

And so we need guidelines and you need to stop bad actors because they’re making us, the good actors, look bad. And if consumers can’t trust what’s out there, then they’re not going to believe us the same way they shouldn’t believe these other companies. So that’s happening in Africa.

10:47 – Sheel Mohnot

But there’s tremendous growth in both Asia and Africa. There’s just tremendous growth of middle class. And they really are starting from a place that’s much worse than where we’re starting from. We have healthy card penetration. We have a pretty good banked population. But if you’re starting from a unbanked population, you can grow a lot faster, getting people into the formal financial system.

11:15 – David Reiling

Yeah, I would agree. Working in that space of the un- and underbanked, and underserved, it is. But again, to your point, the trust factor, very important in terms of scaling a business in that. So let’s move on. Again, an entrepreneur at heart here in the owner of the bank. So I think in terms of this mindset.

11:36 – David Reiling

So I have to go back to the Pitch podcast because I do think it is a rudimentary skill for almost everyone. Now, granted I’m an entrepreneur, so I think in this terms. But you’re listening to pitches. In your background of the Pitch podcast, are there some elements that you listen for in terms of a good pitch or the quality pitch, or maybe the difference between investing and not?

12:02 – Sheel Mohnot

Totally. So there are a bunch of things that you see that are just like red flags. The one that irritates me is people who just haven’t done math properly. I’m like a math nerd, so I quickly am able to do it. And if these folks have been thinking about it for a long time, they should have these numbers top of mind. I think other people just haven’t prepared and they don’t know their competition. They don’t know what we invest in or who we’ve invested in. And I think the best folks know that stuff quite well and can speak to it.

12:42 – Sheel Mohnot

And the other thing is I think a lot of folks get stuck behind measuring things and getting excited about things that, frankly, do not matter. And we really want to think about, where is the business going? What matters? If you won some magazine award, that’s great. But I don’t care as an investor. I want to see something that’s going to drive towards becoming a big business and ultimately try to keep it there.

13:18 – David Reiling

Exactly. Know your audience for sure. Know your numbers. Totally agree with that. And it’s so interesting to hear when you’re listening to the podcast, that if you have an ear for math particularly, you really pick it up quickly.

13:34 – Sheel Mohnot

Absolutely.

13:36 – David Reiling

So I have to take somewhat of a left turn, and I’m going to start with some congratulations. I think you may know where I’m going. But I can’t get through this conversation without talking about your recent wedding, which is fantastic. And you won– you and your wife won a contest to have your wedding in the Taco Bell Metaverse. Now–

13:58 – Sheel Mohnot

That’s correct.

14:00 – David Reiling

–I just– I need to take and breath in that and go, Wow. That is fantastic.

14:05 – Sheel Mohnot

And when is in–

14:05 – David Reiling

You have found a wonderful mate because she obviously gets your crazy to some regard. But tell us a little bit about that.

14:12 – Sheel Mohnot

Absolutely.

14:12 – David Reiling

How does that happen and how was it?

14:17 – Sheel Mohnot

So how it happened? So we got engaged last August. And shortly afterwards, Taco Bell had this contest, that they wanted to choose one couple to get married in the Taco Bell Metaverse. And people kept tagging me on Twitter, “Hey, you should do this. You should do this.” And I thought, OK, this is interesting. I’m a fan of Taco Bell. Don’t really care for the Metaverse that much, but I’m a fan of Taco Bell. But is my wife going to– my then-fiancee. And so I brought it up to her. We were on a road trip. And she said, hey, you know what, it’d be fun to make a two-minute video. It’d fun to just make a two-minute video. We were on a seven-hour drive. So we spent 20 minutes penciling out what we would say on this video, and then we stopped for, maybe, 10 minutes and recorded a video.

15:09 – Sheel Mohnot

And then we didn’t think we were going to submit it. We were like, it was just a fun exercise, a mental exercise, what would you say about ourselves. And then, we thought, you know what– we came back from this road trip, we thought, you know what, let’s just submit this thing. Who knows what’s going to happen?

15:23 – Sheel Mohnot

So we submit it, and then Taco Bell gets in touch with us and say, hey, we’ve chosen you. And we thought, OK. We don’t know if we actually want to do this. What the hell is the Taco Bell Metaverse anyway? And so, they tell us, no, this is going to be your wedding in this Metaverse Decentraland we’ve chosen.

15:46 – Sheel Mohnot

And it’ll be fun. You’ll get to do whatever you want, and all this stuff. And you’ll be part of the Taco Bell family. And when they said Taco Bell family, I said, I’m in. And so, over the course of the next four or five months, we planned the wedding together with many folks from Taco Bell and their ad agency as our co-wedding planners.

16:10 – Sheel Mohnot

And we’re both Indian, myself and my wife, and so we decided to do an Indian wedding in the Taco Bell Metaverse which sounds absolutely crazy. Even now that I’ve heard it so many times, it still sounds crazy. And we had a bunch of Indian things. There’s something called a baraat, which is the groom rides in with all of his friends, dancing around.

16:34 – Sheel Mohnot

And I came in on an elephant in this Metaverse. And I have to tell you, the elephant was a big ordeal, actually. And ultimately, Taco Bell told me, it cost more to build this elephant in the metaverse than it might have been to just get elephant at a wedding. And it’s because there was no concept of riding. They had to engineer the concept of riding an object.

17:04 – David Reiling

Oh, wow.

17:05 – Sheel Mohnot

And it was really fun. The whole thing, it sounds crazy, and it sounds stupid. And in many ways, it was, but we have really had a good time with it. Our friends from all over the world were able to attend. We had a group where people were sharing stuff. And it was really fun. We loved it.

17:20 – David Reiling

Yeah. You know, I smile every time I think about it. And since you brought this up, the one advantage that I had did not think of is, especially family members across the globe and friends across the globe can witness it, or participate it, or at least engage in some way, shape, or form. So you can really open it up.

17:44 – David Reiling

But I have to bring up, maybe, the more sensitive subject in that I have several friends of Indian descent. Their parents in India, it’s very much a family-driven– there’s intensity around a marriage, in my opinion, for my– it’s like, how did you sell them on it would be the question I have for you.

18:06 – Sheel Mohnot

Yeah. Great question. I mean, number one thing is, I’m old. And they were just like, get this guy married. They’ve been trying to get me married for 15 years plus. So they were like, OK, he’s crazy. We always expected something crazy from him. Let’s do it.

18:29 – Sheel Mohnot

The other thing is– this was our legal wedding. This Taco Bell Metaverse wedding was our legal wedding, but it actually was one of five that we have this year. So we started out the year in India. It wasn’t a wedding, but it was a wedding-related event, where our families met each other. A lot of my family in India can’t come to the US for visa reasons and, frankly, couldn’t afford it.

18:51 – Sheel Mohnot

So it was an opportunity to do something for them, then we did this Taco Bell Metaverse wedding, two months ago, in end of February. And then, in July, we have a wedding at my wife’s family’s place in Cleveland. And then, we have the one that we’re most excited about in Mexico in September, and then one where I grew up in November. So it’s really quite a lot of celebrations that appeased our parents.

19:21 – David Reiling

Yeah, I get it. OK.

19:22 – Sheel Mohnot

You’re absolutely right, though.

19:24 – David Reiling

Well, thank you for sharing that. I was just wondering how that would fly in my family, and I couldn’t quite get my head around it. All right, so, Sheel, I have one final question for you. So please indulge me in this. So with your mindset and background, what does the next– and this is a hard transition. What does the next generation of banker look like in your mind?

19:49 – Sheel Mohnot

Yeah. So I really think there’s– we talked about this merger of finance and technology not yet having happened. I believe that the next generation of banker doesn’t necessarily look like the old generation, which, I think, relationship banking probably is here to stay, and I think that makes sense.

20:17 – Sheel Mohnot

I think commercial banking is here to stay, but I think it maybe looks different. And I think, if we think about a small business these days, they are operating in some software world, where they have some system of record, some operating system for their business.

20:37 – Sheel Mohnot

If it’s a restaurant, it could be toast. if it’s a yoga studio, it could be mind, body, all these other things. And we think that those companies are well set up to also be a portal into your banking journey. And I think bankers that work in an integrated fashion with that system of record will be better than those that aren’t.

21:01 – Sheel Mohnot

And that system of record might actually have more information than you could possibly have as a bank. And I think that that’s one element of it. But I think I think, in general, there’s a lot more software that’s going to be used in banking. And I think some of the banks are recognizing this and moving forward. And I think the big banks are building their own teams. I think the smaller banks are working more closely with vendors.

21:35 – David Reiling

Yeah, that’s a good assessment. But I agree with you in terms of the software, and what it’s telling us, and the data that comes out makes for a different banker. And hopefully, a better one that’s more informative, and consultative, and quick, given today’s world. So, very cool.

21:54 – David Reiling

Well, Sheel, it has been super fun to talk to you today. Thank you so much for your insights and sharing a bit of your personal story with us. It’s been a delight to have you on the NextGen Banker podcast.

22:04 – Sheel Mohnot

Thanks for having me. It was really fun.

22:05 – David Reiling

Cool. And for our audience, thanks for listening to the NextGen Banker podcast, and we will see you soon.

22:13 – Becca Hoeft

For this episode’s musical feature, we’re showcasing Aardverk. Aardverk is Darren King flexing his skills as a producer, with a tasty mix of beats and synths, determined to inspire movement. Here is Love You by Aardverk.

22:29 – [AARDVERK, “LOVE YOU”]

23:34 – Becca Hoeft

That was Love You by our Aardverk. You can find more of Aardverk’s music in Spotify. If you would like your music featured on the NextGen Baker podcast, email david@nextgen-banker.com, with a link to your music and website. Thanks for listening to the NextGen Banker podcast. We’ll see you soon.