BBVA is shaking up the way it invests in fintech startups, closing its $100 million in-house fund and pumping $250 million into a new independently managed outfit called Propel Venture Partners.
BBVA will invest $250 million - including the BBVA Ventures $100 million - as a limited partner in Propel, which will use the money to invest in a US and European fund, putting cash into fintech firms from its San Francisco headquarters and a London office.
BBVA took the then unusual step of launching its $100 million fund in 2013 and has used it to invest in digital lender Prosper, wealth management advisor Personal Capital and Taulia, an online cashflow management tool.
Propel will now manage these investments and hunt out new opportunities, with a focus on early to late stage investments in firms working in payments, credit, insurance, wealth management, e-commerce, security and compliance.
The new fund's managing partners are former BBVA Ventures managers Jay Reinemann and Tom Whiteaker, and newcomer Ryan Gilbert. Propel is also currently recruiting for its London office.
With several banks now running their own fund, BBVA hopes that it can gain an edge and attract startups by working through an independent entity.
According to TechCrunch, the BBVA Ventures fund was also restricted to investing a maximum of just five per cent in any round because it was structured as a small business investment corporation. This meant that large deals such as the recent acquisition of a 29.5% stake in UK challenger bank Atom had to be done through BBVA itself.
Teppo Paavola, chief development officer, BBVA, says: "In an increasingly competitive fintech venture capital environment, we believe that our increased capital, Propel's independence and a presence in London can enable us to invest in the best fintech start-ups and better support BBVA's vision of using technology to change financial services for the benefit of the customer."