Project Fintech accelerator Round 2 advances amid 'measured optimism'

By Milt Capps
Published Monday, April 29, 2024 5:00 pm

Accelerator 2.0 broadens focus to embrace all-inclusive fintech
New EIR is veteran of long-hold, big-exit Tennessee fintech pioneer
Tennessee attributes create unique opportunity in livable state
State bank overseer makes clear he's following key issues
Legendary fintech VC promises to stay involved as volunteer

PROJECT FINTECH's window at the Nashville Entrepreneur Center (NEC) is always open for rolling waves of applications, but founders who are eager to enlist specifically in Cohort 2.0, which commences in June, must submit applications by 11:59 p.m., this Friday, May 3.

Project Fintech's Cohort 2.0 is open to Pre-Seed and Seed-stage builders in banktech, payments, wealthtech, insuretech, lending, healthcare fintech, proptech, peer-to-peer or decentralized finance, and other fintech segments.

At least 15 fintech startups had applied for Cohort 2.0 as-of four days ago. Apply for the Cohort via the form here.

The kickoff has been set for June 26. Applicants for 12-week Cohort 2.0 must file by the end of this week. Accepted founders will receive their invitations by June 1.

Fence-sitters might note that last week, San Francisco-based fintech specialist FT Partners observed in a note attached to its Q124 fintech conditions report, "A collective sense of measured optimism developed throughout Q1 2024, as the S&P 500 recorded its best-performing first quarter since 2019, the [overall] Tech sector reported stronger-than-expected earnings, and consumer retail spending held strong while unemployment remained low..."

The firm then added, in part, "For the FinTech sector, while Q1 deal activity initially got off to a slow start in January, it built up momentum throughout the quarter with several large deal announcements, culminating in a 24-month financing deal-count high in March."

Anyone considering pursuing a seat in Cohort 2 is probably aware that the NEC's Project Fintech is this state's only nonprofit fintech accelerator. It has Industry Partner status with Tennessee Technology Development Corporation dba Launch Tennessee, a sub of Tennessee Department of Economic & Community Development (ECD), which is, in turn, led by Commissioner Stuart McWhorter, who previously co-founded a venture capital firm, among other investment experience.

Launch Tennessee confirmed April 25 that NEC received $275K in contract funding for NEC support of Project Fintech spanning half of FY2023 and full-year FY24.

FY25 ECD funding for regional accelerators has not yet been finalized, given that the state legislature only very recently approved State ECD funding.

Perspective: About a year ago, nine startups -- a third of them based in Tennessee -- ultimately made it into Project Fintech Cohort 1 (out of a field of about 40). Those alumni are listed here.

Making certain assumptions about tradeoffs between virtual and in-person sessions, Project Fintech could eventually accommodate, say, 20 or more startups per cohort going forward.

VNC's research suggests Cohort 2.0 is more likely to come out the gate with 5 to 10 very interesting companies aboard, as management continues to prioritize the quality of the experience for founders and the leverage it affords participating companies.

The 12-year-old Nashville Entrepreneur Center, the robust regional market it overlooks, competitive state taxes, relatively low operating costs for resident firms and their employees, and the state's natural resources have proven strong attractants to startups and mature enterprises, alike.

Greg Gonzales JD

Also important for fintech entrepreneurs is the fact that, while the cost of capital and freedom to innovate and operate are heavily influenced by federal regulations and fiscal policy, Greg Gonzales JD, Tennessee's commissioner of the state's department of financial institutions (DFI), has for years demonstrated growing interest in deeply understanding the tech-related needs and concerns of the state's banking and entrepreneurial communities.

Responding to questions we posed, Commissioner Gonzales told VNC in January, "We have established strategic goals within TDFI to monitor the technology landscape among our depository institutions and to understand emerging technologies within the industry. The Department seeks to support the ability of banks and others to adopt technology while ensuring that such adoption is carried out in a safe and sound manner. I look forward to seeing how things develop in this area over time."

An assistant to the commissioner later confirmed that TNDFI staff are working on initiatives concerning some of the tech-relevant issues the commissioner methodically laid out in his carefully drawn responses to the aforementioned full Q&A.

The full transcript of that Q&A with Commissioner Gonzales is available here.

Beyond that, the best Project Fintech endorsement may come from founders who recently completed Cohort 1.0.

Thus, VNC highly recommends that readers with fintech plans or aspirations set aside time for a start-to-finish replay of a practical-yet-spirited Project Fintech 2023 alumni discussion of both the program and some startup and growth challenges they faced. The video is here.

David Malone

Much of the leadership and domain-specific fintech knowledge for guiding teams participating in the forthcoming new Project Fintech cohort is to be provided by Entrepreneur in Residence David Malone, 56, who recently accepted that key advisory role.

Malone and the NEC team are continually refreshing and adding Mentors for each NEC cohort program. Qualified fintech veterans and others who hold specialized knowledge regarding early-stage fintech challenges are encouraged to contact the team via the Fintech Mentor Network Interest Form here.

Project Fintech EIR Malone was one of four co-founders of Nashville-based fintech startup Capital Confirmation (fka Confirmation.com).

Among other roles, Malone served as president for Confirmation's international business expansion, prior to the company's 2019 sale to Thomson Reuters for about $430MM. VNC's Confirmation coverage here.

Maryn Papazian

Another linchpin in Project Fintech is Program Manager Maryn Cannon Papazian, who was immersed with the NEC Cohort 1.0 team for the past year. Papazian's LinkedIn reflects experience in nearly a dozen entrepreneurial, creative and enterprise pursuits prior to joining NEC, as well a Georgetown University business degree.

In addition, Dakota Simpson, now 28, joined NEC in 2023 following a series of roles in state economic development and other agencies, following his years as founder-operator of event-oriented Simpson Entertainment Services. He holds degrees earned at Vanderbilt University's Peabody College and at Dyersburg State Community College. NEC release here.

NOTE: While forthcoming Cohort 2.0 has a wide aperture in its pipeline, Project Fintech's 2023 Cohort 1.0 focused on banktech, start to finish.

Joe Maxwell

Whereas Malone is a fintech veteran embedded with the NEC team, leadership for Cohort 1.0's formation was provided by volunteer Joe Maxwell MBA, the long-time Project Fintech advocate, startup founder, operator and active SeedA-B investor via his FINTOP Capital.

Since 2016, Maxwell's FINTOP has invested in 53 fintech startups, drawn from a total of at least 32 other U.S and UK cities, with New York City and environs getting the largest single share.

FINTOP, itself, has invested in four Tennessee companies, all based in the midstate.

In the 2017-2023 period, FINTOP deals totaled in the 5-to-9 range. each year. Two FINTOP deals have been done thus far in CY2024, one of them not yet announced.

Not surprisingly, queried for this story, Maxwell soundly endorsed the appointment of Malone, adding that he and his FINTOP-linked colleagues "will continue to support the program" on a volunteer basis, as warranted.

As the only fintech-only VC in this state the ecosystem Maxwell has built, anchored by his firm, allied organizations (including his occasional personal pre-Seed Angel and small-business bets) produce energy and assets in this market and beyond.

Among other interests, Maxwell is chairman of Rogersville, Tenn.-based Thread Bank (known until two years ago as Civis Bank), as well as prime mover in JAM FINTOP Capital, which was created in concert with affiliates of Jacobs Asset Management, New York. Related FINTOP coverage.

In driving Project Forward with his long-time friend and former NEC CEO Jane Allen and her successor, Sam Davidson, Maxwell was augmented by FINTOP Principal Brittani Roberts MBA and volunteer EIR Lee Farabaugh, herself long associated with FINTOP portfolio company, Core10.

Farabaugh recently became president of Monarch, a SaaS implementation and configuration services provider that prioritizes the fintech market.

NEC's current plans suggest Cohort 3.0 will not convene until 1Q 2025, with applications for 2025 a continuing, rolling basis after the Cohort 2.0 admissions are finalized.

Venture Nashville Connections regular reporting on fintech led VNC in 2015 to propose to Joe Maxwell and to FT Partners, with active encouragement by Maxwell, to sponsor a public meeting at the NEC to gauge Tennesseans' interest in forming something like Project Fintech.

The event was a resounding success, but it was eight years later that Jane Allen, Maxwell and LaunchTN rallied to take the idea to reality. VNC

. last edited 0838 30 April 2024