Carey: Corporate venture capital has tended to only reside at the highest echelon of companies. And there are so many midsize businesses in many cases where they have industry groups. And so I do strongly believe that there is an opportunity to do it. And we just kind of had the perfect storm of people come together. to build this.

Lincoln: Welcome to Funds That One, where we dive into some of the world's most renowned investment funds. We'll interview investment managers across the alternative landscape and learn how they built their million and even billion dollar asset management empires. We'll explore teams, structures, strategies, and best practices in launching and running alternative investment funds. All right. Well, today we've got Kerry with BankTech Ventures here today. Kerry, thanks so much for coming on.

Carey: Absolutely, Lincoln. Thanks for having me.

Lincoln: Yeah. Well, hey, why don't we start, why don't you give me the elevator pitch on BankTech Ventures?

Carey: Sure. So BankTech Ventures is a strategic investment fund for the community banking industry. And in fact, we would say we are the strategic investor for the future of the community banking industry. And so we, through a consortium of over 100 banks who have joined our fund and ecosystem, we identify and vet and de-risk the next generation of technology solutions to make banks more relevant, efficient, competitive in the world that continues to digitally transform what banking is.

Lincoln: Okay. So a VC fund primarily targeting the technology and infrastructure for banks?

Carey: It's the entire stack of banking as you think about it. So we cover the entire landscape from things that could be technology infrastructure, It could be new products and services that they offer to their customers. So it ranges from back office to customer facing, from new revenue streams to efficiencies and cost reductions. And so as we think about the fully digitally transformed future bank, we are investing in the puzzle pieces to help make that a reality in the years to come.

Lincoln: And in the community markets.

Carey: With a focus on community banks, that's right. So you still have somewhere between 4,000 and 5,000 community banks still in the U.S., and we are working diligently to try to keep as many of those independent and viable businesses as possible. We have this strong belief that our financial system is a more unique and compelling financial system in the world in large respect because of the diversity of the financial services providers out there, and that we have so many different ones that has allowed capital to get to the edges of our economy in ways that other countries have never been able to do, and that having community banks in business is a key part of that, and it was evidenced as recently as COVID with PPP, where community banks rose to the occasion and helped save thousands and thousands of businesses all over the country at their time of need by helping them get PPP loans and really adapt at that crazy time that we all lived through, community banks ended up doing more than twice as much volume of PPP loans for small businesses in their respective communities as their market share in banking would indicate them to do. So they really stepped up at that time of need when their communities really needed them. And that was a big impetus for us to even launch BankTech Ventures was to say, look, you did it, keep going. keep evolving, keep adapting, keep transforming, let us help you do that successfully, cost-effectively.

Lincoln: Wow. And so, you recently closed your first fund, right?

Carey: Yes. In August of 2022, we closed the first fund with just over $115 million. Excellent. Congrats as well. Thank you.

Lincoln: I got to ask, are your LPs primarily like banks or commercial LPs?

Carey: Yes, it's almost entirely community banks and bank holding companies. We have 110 community banks in 33 states who are part of our fund and then just a handful of other I would call them bank-affiliated limited partners, retired CEOs, bank directors, people strategically in the community banking industry that see the real strategic value of having a collective of parties like that all together in a fund together.

Lincoln: Excellent. Well, I got to throw this in here. So I actually started my career at one of the bulge bracket banks. And I have to say the technology was frightful. It was pretty bad. It surprised me how terrible the technology was. So I think that's incredible what you guys are up to. But I'd love to jump in and hear about some of the, I mean, you've been in operation now a year?

Carey: It's actually been just over two years. So we made our first investment in November of 2021. Okay. We've made 18 investments so far. We're about two thirds of the way through the first fund when I think about the investments we've made and then reserve for follow on that we expect to make. So we've made really good progress in a short amount of time.

Lincoln: Yes. Talk to me about some of your transactions that you worked through.

Carey: Sure. So part of our model is to understand where community banking is going. As I said, we're thinking about the future state technical architecture as well as business foundation of community banking. One of the things that has happened in recent years is that more and more community banks are orienting to commercial business. over traditional retail business. And part of that has been the belief that they can't keep up with the arms race when it comes to retail banking. So they can't keep up and spend billions of dollars like JP Morgan or B of A or others do on consumer banking. You've seen a huge emergence as you well know of consumer fintechs. And traditionally, community banks have banked retail consumers through branches. And the newer, younger generations of customers are not likely branch customers. And so there's data that's come out showing that more and more consumers are opening their bank accounts with fintechs, as younger consumers are, as an example, because they have the slickest, newest features in mobile apps. And whether that persists or not, that's the current reality. And so Banks tend to look at small businesses in their community as the backbone of those communities, and that's where they can continue to provide more bespoke solutions. So those are the kinds of trends and realities that we start from when we think about investment DCs. And we still have banks that have huge branch footprints. We look at ways to continue to help them in that retail side. But I would say we focus more of our attention on the commercial side over retail consumer. So when we think about the types of companies we'll invest in, sometimes it's thesis driven, and sometimes it is really reacting to things that we are getting referred or are finding us coming inbound. So we have a bit of both that we are doing. So to start with a thesis driven one, as an example, one of the things that we observed when we were first launching this is that There's a trend happening where historically community banks have relied upon what were called their core banking vendors as their primary source for software solutions. So the core vendor, the primary ones are companies like FIS, Biser, Jack Henry are the three largest market share. They were the providers of the core banking system, which was really the transaction ledger for the bank. They also provided some ancillary products around it. Often those were considered kind of the best suite for the bank. In more recent years, to keep up with the pace of change, more leading-edge banks have had to adopt best-of-breed solutions in other areas outside of their core bank, and the core bank inventors just weren't moving fast enough to keep up as well. The challenge that starts to present is that you now have multiple types of vendors that are moving data around the bank in different ways, and you have to create integrations between all of those. The core banking vendors have tried to be walled gardens. They've made it very difficult to get data out, to put data in that they didn't control. And so there was a very clear need for an integration provider that could really be that center of how integration and data and services moved around banks. Because if you really think about where banking is going in a fully digitally transformed way, it's a software and data business. You're moving ones and zeros around, which is really how money is primarily moving today. We're not moving so much weight in physical cash as we did decades ago. And so we went out with the thesis of there needs to be an industry integration platform that talks to the core banking vendors, but also talks to all these emerging other vendors and can really help manage that increasing complexity of providers. And so we went out, we found a handful of companies. that were doing it or purporting to do it, we found the one that we believed was the most viable and best partner to work with community banks. And we made an early investment in that as really a central thesis for the fund. And we have ended up through that, then they've raised some fallen capital. I think they had about maybe eight or 10 banks working with them when we invested. They're now at 150, I think, as they ended this year. And what they're also realizing is not only are they a great partner to banks, but they're a great partner to all of the banking tech or fintech companies that need to integrate into banking software, because most of those companies do not want to be in the integration business. But they need to have their software integrated to be able to be purchased and used by banks. And so in many cases, they have done partnerships with Port X, which is the name of the company, and are actually selling Port X along with their solution. as the way to really complete the sale. So it's become this very virtuous cycle where, in many cases, if a bank is buying a new online account opening solution, that company is shipping that with Port-X as the component that ties it into the core banking system. That then brings Port-X into the bank and they can then expand from there into other areas where the bank needs to integrate solutions. So that's been a a really key part of what I would call the future state architecture of where a community bank is going to end up and gives them a lot more control of their vendors so they don't feel so locked in to some of the core banking vendors that they've historically worked with, in some cases for multiple decades.

Lincoln: Hey guys, thanks for listening. As you know, we don't run ads on this channel, so if you could really help me out, if this podcast has added any value to you or your business, please subscribe, rate, and review. I would appreciate that greatly. Thank you. like blue ocean technologies that just aren't even existing there? Or are you trying to take current infrastructure and enhance it? Like, you know, or what, you know, where does the where does the line?

Carey: Yeah, I would say we probably are a little bit more to the latter of what you described me that the one challenge with, you know, call it a blue ocean technology, is that banks tend to be fairly conservative when it comes to unproven technologies. And a perfect example is something like blockchain, which as a core technology, definitely has people interested, but they're continuing to look for what is a proven use case where blockchain as the infrastructure is a more cost effective or efficient or secure infrastructure than what I have today or what alternatives might be out there. So banks do not tend to chase what I would call shiny object technologies like other industries might. And so as a result, We end up spending more time on what I would characterize as fairly proven technology with business value or application value that's fairly clear built on top of it. And that's where our banks tend to gravitate and say, oh, yes, this is going to be very meaningful to driving efficiency or increasing the strategic value we can provide to our clients or give us an ability to go out and compete and win more business in this particular area. And so when they can see a very clear business case from working with this particular company, that's when they tend to really lean in and go, yes, this makes a ton of sense to us, we should do business with them, show us how to do it, and we can get banks to move fast and implement things and get the value. And so time to value is one of those measurements that we spend a lot of time thinking about. And so part of how we think of ourselves is almost as a proxy for the industry, trying to understand what would it look like for not a bank, but for a bunch of banks to work with this company, where are going to be scaling issues or risk issues or whatever the questions might be. And that's a part of our process for evaluating not only is this a company we should invest in, but is this a company that's going to be a good partner to the industry?

Lincoln: Okay. So talk to me about how that works. So that's what's spinning in my mind right now. I was like, okay, are, are these banks allocating into this, into your fund as a primary fiscal driver? Or there's obviously some, some benefits there by enhancing industry. Have they like, are there special negotiated, you know, discounts on the services or like, you know, talk to me through the, the kind of, uh, the economics there.

Carey: Sure. So I would say to a bank, they look at bank tech ventures as a part of their innovation and R&D investment or expense, depending on how you look at it. They, I think in most cases would say, we were going to spend or invest this money one way or the other. And we think the opportunity to do that through a fund that is going to go out and do all this work in the evaluating of all these companies, they're looking at them not just from an investment standpoint, but also as are they viable, good companies with valuable products for community banks? All of that work is work that we do through the course of having a fund. And so our investment decision is really the last decision. Is there an opportunity for us to own a minority stake in this company and have aligned interest to help them grow and thrive as a partner to tens to hundreds to thousands of community banks? And so the work that we do in that process really through a funnel we provide all of that work and evidence to our banks. And in some cases, that's helping them as they're thinking about potential vendors for an area of need of the bank. And they, in many cases, were one of their first calls where they're saying, hey, we're thinking about, I mentioned, online account opening. who are some providers we should talk to. And we may or may not have made an investment. We may never make an investment in one of those companies because maybe we feel like we can't pick a winner or it's too commoditized or whatever it may be, but we still have done evaluation because that's a core part of the architecture of what banks need to have to continue to be relevant and viable in the years to come. So our process is we're out looking at all these emerging companies, we tend to be tracking at any point in time, probably 1000 companies. And then we're on average making somewhere in that eight to 10 investments per year. through the process of, is this a company that should be part of our ecosystem that we feel like, as I said earlier, is going to be a good partner to community banks, and we can be a good partner as part of their cap table to help them operate, grow, thrive in supporting banks as well.

Lincoln: Excellent. That's fascinating. So do you think, let me just ask you directly then, do you think that these LPs are investing primarily from a fiscal motive of generating a term or primarily just like, Hey, look, we're going to allocate dollars anyways. We might as well have a contact in the industry. We want to know what's best in class. Like we want to be right there and involved in this infrastructure.

Carey: Yeah, it is primarily the latter, that this is about intelligence and understanding with the dual benefit that if this works right, they'll get perpetual positive value back through investment returns. And that's actually two years in, that's what's happening. So for a two-year-old vintage fund, we are well into positive return territory when it comes to the investments. Normally, a fund at this stage of life would have a negative IRR as it goes through the typical J-curve process. And we are well into positive territory. We've actually given money back to our investors already through one of our companies that has grown really fast, is producing a tremendous amount of cash and is distributing that back to us as an investor. And so the machine of, if we find the right companies that are useful to community banks, the banks work with those companies, that creates more value for those businesses which we own a stake in. Our real goal is to continue to perpetually help them fund their R&D and innovation and transformation budget through that investment in our fund and then If we're picking the right companies that they're working with, it's also having business impact on their banks as well. So it is a very virtuous cycle that we envisioned. And so far, a couple of years in, it is working fantastically.

Lincoln: Well, that is, that is incredible. So I have to ask, like, you know, how does, how does what get into starting a bank tech fund? You know, like where did I love to hear the backstory on you and how the, you know, the impetus for this firm.

Carey: Yeah, so it was not my idea. And I was kind of the final piece of the initial general partnership team that came together. And so one of my partners, who was really the idea behind it, he has been in the community banking industry, has operated an investment bank in the industry for several decades. And he has an annual banking conference where a number of bank CEOs come together and they talk about topics and learn from each other, but also present to bank investors and analysts. And he stood up in front of them during COVID. and said, I think there's a need and an opportunity with all of these emerging technology companies out there trying to work with you and your banks for someone to put together more of this collective type fund structure where we all could pool resources and have a really a shared services model. with a fund structure to go help us understand and de-risk and rationalize who are the best companies for us to work with. And so Steve really had the vision for that. He looped in a couple bank CEOs who are two of the more progressive bankers in the country in that small end of the banking market. One of them is one of the leading what's called banking as a service banks. He's the partner bank with a number of big emerging fintechs and is very innovative on that side. The other one is a purely commercial bank who had quietly been building their own technology for the last six or seven years because they couldn't find what they felt like they deserved as a small bank in the market. And so they said, we're in to help, and we'll actually be willing to be pilot banks in a world where with an early stage technology company trying to work with banks, typically their biggest challenge is getting that first bank to say, we'll work with you, we'll give you a chance, we'll pilot you, we'll help you figure out what you don't know or what we need to have to make this really work for us. And so from out of the gate, we had somebody who was deeply knowledgeable of the community banking industry. We had two bankers that said, we're interested in willing to be those pilots. In some cases, it may not work, but we'll at least take that bullet for the industry so that others don't suffer similar frustration. And then, The last two pieces, the biggest advocacy organization for community banking is called the Independent Community Bankers of America. They're based in D.C. and they actively advocate and lobby on behalf of the entire industry. They started an accelerator program for emerging banking technology companies about five years ago with the idea that they could help these companies as well by getting them in front of a number of their community banks during an accelerator program. And that could help the banks learn about innovative solutions and also help the companies own their strategy and story to be more specifically relevant for community banking. And that program was going pretty well. The person that was operating the program was starting to have bankers bending his ear saying, you have some really interesting companies in here. It'd be great if you could create a way for us to be able to invest in them. Participate. And so Wayne felt compelled to go find a way to do that. He was out trying to figure that out. The ICBA in partnership with him was interested and Carson and Eric and Steve, the bankers and the investment banker, were trying to put this together. They all came together and said, we think there's something here that's going to be really compelling for the industry. We just need somebody to run it because we all have day jobs. And it just so happened that I knew both bankers. I had known Eric because I had helped build a pretty significant fintech company where Eric had been our bank partner. And so I knew him from that. And then Carson, who runs SunWest Bank and is one of the commercial banks that I was describing earlier, I knew him in the business community where we both reside in Southern California. And so they called me and said, you know, you know, a fair bit about fintech. You've been investing for a long time. They didn't know, which I then later told them I have a longstanding family history of involvement with a small community bank in Indiana. And so community banking is actually in my heart because that was my earliest exposure to financial services. My dad was chairman of the board of this small bank until recently when he stepped down. And so it just all fit together. And I said, you guys seem like a great group to be partners with. I'm interested as a serial entrepreneur and building something that's really unique and differentiated. And I think this might actually work. And it seemed like the right idea at the right time.

Lincoln: Incredible, incredible. And so did you actually, did you have to go pound the pavement and raise money or was it all kind of the infrastructure set up before you stepped in?

Carey: No. So the idea was together and I came in right as fundraising was getting going. And I would say the silver lining of joining what I did, so this was in the fall of 2021. And if you think back to that, Historically, community bankers are very relational. That is how they differentiate. And often that is meet in person, build relationships, press the flesh type of relationship building. In the fall of 2021, people were still somewhat forced to virtual communication. And so because of that, it actually made fundraising a bit more efficient because they were having board meetings on Zoom and Teams, and they were becoming more comfortable with the idea of virtual relationship building. And so as part of our fundraising process, we had to touch hundreds of banks, but we were able to do it in a way that was probably more efficient than it would have been a few years prior. And I was able to zoom in to dozens of bank board meetings to explain to them what we were intending to build with BankTech Ventures, what our investment thesis and our process was expected to be, and explain to them how a fund like this was going to work. And that actually made it way more efficient than if I had had to go to all of these board meetings. Small towns. I mean, as I said earlier, we have banks in 33 states and I travel a lot and I felt fortunate as we launched that first fund that we were able to do at least a good portion of that. virtually in the beginning. And since then, I've been able through both individual and group events to get to meet everyone face-to-face, but it was efficient at the time.

Lincoln: Yeah, that's fascinating. Well, banks are known to have a lot of rules and regulations sometimes. So, has that been a hurdle for Were you guys in the fund at all? I mean, let me ask, was there conditions with the capital that they allocated into this fund or have you had to walk fine lines in that regard?

Carey: So the main things that they're sensitive to are around things like ownership percentages on the individual bank basis. So there are certain regulations that they can trip if they own a higher percentage of something than regulators may want them to. And so we had counsel that drafted all the requisite details in our operating documents to make sure that we didn't bring a bank or bank holding company in at a level where they were beyond that. So we don't have a, I mean, part of why we have such a diffuse bank LP base is because most of them are in at a de minimis ownership percentage amount. Gotcha. And so, you know, because they think of it as really a R&D and innovation investment and expense, what we really were counseling them when we went through a lot of the discussions was more about make sure you, for your bank of your size, really reflect on how much do we need to put into this so that we'll actually pay attention to it. because it's more important that it's meaningful to you and your bank so that you as an organization will pay attention to it and listen and show up and actually get the business value out of it than if you just throw money at it and it's a passive investment because that's not what it was designed to do or be. And most of the banks really tried to find that threshold that makes sense for them. And it depends, depending on how big or small that bank is, what that threshold was. So we would give them some guidance. But that was really the guidance that we tended to give them is don't just do it to throw a little bit of money into fund, do it as something that when there's a webinar or when there's a summit where we're bringing people together, you'll allocate the time and energy where it's meaningful enough that you want to be part of it.

Lincoln: Excellent. Well, what does the future look like for BankTech Ventures? It sounds like you guys primarily operate in the, what, seed series A, ballpark, you plan on You know, getting into more mature life cycles of businesses. Is it planning on staying at the seed end or, you know, pay me a vision for the next five, 10 years of where you guys see this firm.

Carey: So there's a tremendous, as I mentioned, there are well over a thousand companies at any point that we are actively tracking that are in and around bank enabling solutions of some kind. So there's a vibrant startup ecosystem out there. And I think as we project out, we feel like for at least the next decade, that is going to be the case. And the one thing that has typically kept a lot of venture capital out of banking tech is that often they believe that the total addressable market, that you know, it's TAM for short, is often too small, that they can't get the kinds of venture scale returns that they hope for. And so one of the things that we're very sensitive to is just what I characterize as proper capitalization. And we can get fairly creative about how we think about both the size and the opportunity of the company if it is solving real needs problems, creating opportunities for community banks to thrive in the years to come. And so as we think about what our typical investment size and the total investment amount that these companies are likely to need through one to multiple rounds, that is what influences us into sort of the size of investment fund that we think is the best to both serve the industry and create reasonable returns, because we think that those are both, and we're incentivized, the structure of our fund is much like other funds, but we recognize that the way our returns are likely to come are going to come through multiple of our companies being successful, and maybe not just one or two creating high returns and the others failing. That's just not, we know that because our LPs are being asked to work with the companies, because these are meaningful companies to improve their businesses, that viability and survivability of the companies is of the utmost importance. So we spend a lot of time making sure these are going to be viable, profitable, durable companies. And so proper capitalization is a big part of how we think about that, because as you know well, sometimes overcapitalizing a company can kill it just like undercapitalizing a company might kill it. And so we're very sensitive to those things. And so as we think about the future, we think we've found this sweet spot in Maybe a little bit larger than what our current fund is for our next or subsequent funds, but we don't think there's a likely orders of magnitude larger a need for incredible amounts of additional capital because of that, as I call it, proper capitalization. And so we look for founders that understand that, that respect that, that are willing to really work through that with us. And So we'll continue to probably stay roughly in the range of where we are as we think about subsequent funds. With that said, there may be other types of vehicles that make sense. Maybe it is a later stage type fund or private equity style funds that we might see a need for those to be under our overall umbrella, but those are all things that we're really just contemplating as we try to project where we see these thousand companies and the thousand that emerge over the next year or two years, where they're likely to end up. And there's probably going to be some logical consolidation that happens, and maybe there's some new emergent platforms or companies that are the likely foundation of those, and they become the next FIS or Fiserv type company. So we think about those things, but I think at this point, we're still seeing great opportunities to participate in these seed and Series A rounds of companies that have clear value for community banks and have a lot of room to run over their next five to eight years as they're really building out their roadmap of value for the industry.

Lincoln: So just to kind of regurgitate some of your fund economics here, you're not looking for every company to be a potential hundred X, right? You're looking for the majority of your companies to be maybe operationally positive, just like generate revenue. And so, you know, like every company just needs to have a path to profitability. Are you counting on a percentage of those as write-offs where they fail? How do you guys think about that?

Carey: Yeah, we think that the downside management, downside protection, because of the business continuity disruption that it would cause to our banks if they go out of business, is a cost we're going to try to avoid as much as we possibly can. which is why we have banks that are willing to pilot solutions and really, often we'll use the term bake, bake that business case in a way that it's much clearer for the next sets of banks to work with this company. And so we try to do as many things as we can as the industry partner to de-risk it for the industry. And as one example, We do third party risk management, vendor due diligence as a fund, as if we are a bank looking to do business with this company. And then we provide all that work to our banks. And we say, here's all the work as if we were doing it within the bank. And in many cases, that is a significant amount of the percentage of work that they would ultimately do that might take them months and months of time and cost them a tremendous amount of money to do. And we're getting the leverage over the fact that we're doing this across all of our banks. And so we look for ways where we can create that leveraged value. It's more efficient than for the companies because they have a faster path into the bank. So ideally, that's shrinking the timeline of their sales cycle, which is more efficient for their operating capital. So those are the kinds of value add as we think about our place in this ecosystem where we think we can make the banks better buyers. we can make the companies better providers and sellers. And that ultimately should create higher percentage viability, durability of the companies.

Lincoln: Okay. I love that so much. Like you've got an insane value prop, right? On both sides of the ball. And I feel like that's what so many funds are missing a lot of the times is that, yeah, they've maybe got a value prop to LPs, but to the portfolio companies, it may be non-existent or vice versa, right? Like, uh, you know, the, the value prop that you were providing to any partnership firm that you're going to come in and it's, it's very strategic capital, right? You know, you're coming in and you've got this base of LPs and banks, which are their end day, end of day customer, right. Uh, where you can come in and, uh, just help expedite the growth of your business. So, I mean, that is, it's a, what a great way to align incentives. So that's, that's fantastic. Hey guys, so if you want to learn more about investment funds, how they work, how they're structured, if you want to become a fund manager, how I became a fund manager, visit our YouTube channel for more free value. The link is in the show notes. Thank you.

Carey: I think that's really what excited me to come and build this, was that really seeing that if we could create value on both sides, then this was very complimentary and could be a true virtuous cycle that got better over time. We've seen it in that our companies, because we're so clear about the ecosystem that we're a part of, our companies work together. I mentioned Port-X earlier. Several of our other companies work with Port-X because it makes logical sense. Port-X is making their life easier to get their solution into banks faster. So the companies can work together and complement each other. We can help them with sort of dual packaging and positioning to do that. And then we can also help our banks to get more confident and comfortable working with the companies. And because we're helping to get them with a more repeatable process, because they buy from one vendor, they buy from a totally separate vendor on their own, they're not really getting any leverage or learnings from that. But as a conduit in between, and connector, we're often introducing our banks to each other on particular topics, because we know what the individual banks are doing. We can say, oh, this is one of our other banks that just worked with this company or just tackled this problem. Let us introduce you to each other. They start to help each other because they realize that they're within this ecosystem as well. Yeah.

Lincoln: Kerry, I want to shift gears here. The name of this podcast is called Funds That Won. So, I want to ask you, what makes a fund win in your opinion?

Carey: Well, I think, I'll use our example, but I believe that you have a much higher chance of winning if you have a clear strategy What are we trying to do here? And it's somewhat like any entrepreneurial endeavor where you see an opportunity that you believe needs to exist or a better way to do something. So that usually comes from that clear articulation of a strategy and opportunity. I also think that it's about focusing on what makes you different and what is that area of expertise or genius that you have and how do you stay in that as best you can. And to me, if I look at venture as a broad, that doesn't mean that a generalist type fund in my mind can't win. I just think you need to be clear about what is your area of genius. If you're going to be a generalist, it may be my area of genius is really understanding a technical founder and how they're going to be able to build something really hard that others can't and transition from a founder to an operator to a leader. And if you can identify that better than anybody else, that might be your area of genius and you could invest very broadly as a fund. So I think it's about getting clear about what are you going to do great and then lean into how you're going to do that really, really effectively and where then value will get created as a fund. Funds as a structure are fairly straightforward in how you, you know, you can do it from a spreadsheet or you can, you know, do it in how you allocate capital and create your portfolio, which could be really diverse or could be really concentrated. But come up with your strategy, articulate it, focus on your area of genius and then go execute that. And I feel like that with a little bit more upfront planning has a much higher likelihood of winning.

Lincoln: To compound on that question, what advice would you have to somebody who's maybe just getting into this industry or just starting out or thinking about starting a fund of their own?

Carey: I would really get them to reflect on do they understand what the actual work is that you are going to be doing if you're going to start, raise, invest, and manage a fund. you know, and is that the work that you really want to do? Because I think in many cases it's not necessarily clear on the surface how time gets allocated for somebody who's in business running a fund versus what it may look like on the outside when you say, I want to go invest in really exciting next generation, interesting entrepreneurs and companies. But do you understand the work and how that time is allocated? And if you do, and I think talking to others who have been part, whether you're gonna be a solo general partner, as an emerging manager, or you're going to join an already established fund, do you understand the machine and the work underlying that, that it's gonna be required? And is it work you want to do? Because I think in some cases, people aren't that clear that that's what it is.

Lincoln: Well, in your case, I'd love to hear from you. What are some of the things you love about your job and running a fund? And what are some of the things you hate most about running a fund?

Carey: Sure. I'll start with the things that I don't love. And I think most of that would be in the area of administrative details. And I think the fortunate thing with BankTech is we are large enough as a fund that we can hire a fund administrator. We have legal and accounting and other support resources that we've been able to afford to pay for because the fund has at least a sufficient size to be able to do that. And I've also lived through a very micro fund life, not really being in a place to do that and having to do a lot of DIY type of work and recognize that that's not my highest and best use and not what I love to do. So I think the administrative side is just an area that I don't really love. The things that I do love to do, I think there are two. One is I love working with entrepreneurs. Having been one most of my life and working in startups most of my life, I love helping them problem solve and wrestle with issues and try to get to better outcomes. And some cases through pushing them, coaching them, or helping them in any ways. And so that's an area that I absolutely love. And because of that, I love doing deals. In some cases, that's negotiating the terms, coming up with creative solutions to how to potentially get to a yes when you really like what they're trying to do. And so I really enjoy that part of it as well. And I think that was something that really led me to continue to want to do more of that. And I think what also I'd love to do is help people work through change and transformation. And that's what's made BankTech so fun for me is that I get to spend a lot of time as well with our banks, with our LPs. And in a normal fund where you have purely financially minded limited partners, you're not really spending a lot of time with them on their strategy, on their business issues, because it's just part of the foundation or university or pensions asset allocation model. And so the fact that we get to spend a tremendous amount of our time working with our LPs as strategists and advocates and even representing in many cases our companies as core solutions to problems that we know banks and other banks like the ones we're talking to have, we really play this connector role. And so I like the fact that I get to be this teacher and advisor and strategist for individual banks and build these high trust relationships with the banks who really in many cases are our customers as we think about it. You know, the companies that we invest in are absolutely our customers, but we really have to we have also all these banks and I love really working with them and trying to add as much value as we can thinking to them as a as a key customer in this ecosystem and so that I think is what. I love about the structure that we have, but also as I think about a fund, why something like this makes so much more sense to someone like me than maybe a traditional venture fund might.

Lincoln: Gotcha. Well, as we wrap up here, just a couple of rapid fire questions. Sure. Any habits, either personal or professional that you feel like have attributed to your success?

Carey: You know, I am a weirdly, wildly curious person. And I would say one of my habits is just giving myself permission to go dig into something and go research it and read about it and call people and Try to develop a point of view. And so I look back on my career. One of the things I've tried to do over and over as I've gone into new industries is really try to get to a level of understanding and You know, I don't I don't expertise is probably a it's a relative term but get to a level of confidence and comfort in an industry that I could establish a point of view where I actually think this not this or have an ability to articulate a view on something and That has been something that has served me well through a whole array of different industries over my career. And sometimes that may be to, you know, keep him, I sacrifice sleep or I'm up early or something to do that. But when I'm in that curiosity mode of learning, I just try to give myself permission to go into the rabbit hole, if you want to call it that.

Lincoln: Any business pet peeves, things that just drive you crazy?

Carey: I think the biggest one is probably the opposite of what I just described, which is this either cynicism or resistance to learning and adapting. I try to have people around me, my wife is great at reminding me how stubborn or unwilling I am to change in certain areas. So I'm a hypocrite for sure. But I think in business, when I see that people are very resistant to new ideas and change, that's probably one of my biggest struggles. And I try to embody that with the team that we have at BankTech to believe that the ideas and the inputs can come from anywhere and titles don't matter. If someone has done the work and has an interesting idea or input, we'll welcome it from anywhere if it's a better idea or a better solution to whatever we're trying to address. Excellent.

Lincoln: Love it. Kerry, thank you so much for your time today and talking about your background and bank tech is an awesome conversation.

Carey: Lincoln really enjoyed it and excited to get acquainted and look forward to future conversations as well.

Lincoln: All information shared are the sole thoughts and opinions of the author. Do not take any information as legal or financial advice. You should seek a certified accountant and a professional legal team before taking any further action. We are not selling or soliciting a security in any way, shape or form. This content is for educational purposes only and is not to be construed as financial or legal advice. Clients of FundLaunch or Black Card Capital Partners may maintain positions and securities discussed on this podcast.