“I wake up every morning excited to work with entrepreneurs, and that's where I get my energy from, even though I'm an introvert… So, I think from a social impact, from a legacy perspective— this is my last job. This is all I want to do the rest of my career.”
— Logan Allin

Today’s guest is Logan Allin, Founder and Managing Partner at Fin Venture Capital (Fin VC), an operator-focused, early-stage fintech venture firm. Before becoming a full-time investor, he patiently dedicated his career as an operator in financial services, and, advising numerous fintech companies such as SoFi and Addepar, to name a few.

Logan’s expertise in the financial industry spans multiple functions, including (but not limited to); go-to-market, business development, product development, relationship management, engineering, innovation, and compliance. He understands the enterprise landscape of the fintech industry, opportunities, and just as importantly, how to align and move key stakeholders.

Fun fact: Logan used to code and build enterprise software at his first job out of college!

Today, the Fin VC team is dedicated operators with deep corporate and startup experience. Their capital has vast entrepreneurial experience embedded within its DNA— helping portfolio founders successfully navigate the complex waters of the Fintech industry.

In this video interview, Logan shares over a decade worth of learning and discoveries in the Fintech industry. It is perfect for you if:

You are (or will be) a fintech founder looking to build an iconic company.
You are a venture investor who wants to understand the landscape of the fintech industry.
You seek career fulfillment and want to hear from others who have built one around their unique strengths and passions.

— you’ll enjoy this! :)

“If you're ghosting entrepreneurs, you don't deserve to be a VC.
You need to be providing very direct feedback.”
— Logan Allin

Key Themes

The two types of VC’s you’ll meet on Earth— and the new wave of emerging talent!
The long road to being a VC— consciously choosing to be an operator-first.
Helping founders with talent acquisition (beyond just ‘sharing’ their job posting on LinkedIn).
The most positive-sum approach to vetting potential companies to invest in!
The tectonic plates of the financial services industry that are ripe for change.
Founder-market (fintech) fit and company-market fit.
Building the fintech fund of the future— tight-knit, bespoke, and for life!
The implicit reward of helping entrepreneurs build the future.

Transcript

Logan Allin

Yeah, Thanks for giving me an opportunity to share the story here. Both on on a personal level, as well as on our firm Fin VC. While I'm here in my home office in Hayes Valley, I guess just to start at the beginning, I grew up in Europe, I was born in Frankfurt, Germany, and I was not an army brat. I was a corporate brat.

My father was an executive for McDonalds, and he brought McDonalds to Europe and I just followed the hamburger around growing up. So, I went from Germany to Paris to London to Chicago, and then he got tired of selling hamburgers. And my family partially acquired a business called Gordon Beers, which everybody here in the Bay Area knows well, famous for its garlic fries. And so I got free McDonald's until I was 16. And then free beer for ages 16 to 21. So, it worked out pretty well.

But you know, on the career side, my journey was definitely not linear. And I don't think anybody who gets into a certain scene or has some degree of success, and I'm still early in my kind of success quotient, if you will, has a linear journey. And so I started my career out of Duke undergrad in 2003, right after the dot com bust in a pretty tepid job environment and had an opportunity to go be a wealth management broker at Smith Barney. And then had another offer from a consulting firm called Capgemini. And I didn't know what I really wanted to do.

So I went to Capgemini. And they saw on my resume that I had worked as an intern at Citigroup, and so they threw me into the Financial Services Group. So that's literally how I got started in financial services. It was not planned and it was very much kind of a random happenstance and my early projects were for large banks sitting in basements— coding and helping build enterprise software from scratch. In proprietary technologies like portfolio accounting systems and CRM systems and so forth.

Thank goodness third party software emerged to solve those problems. Otherwise, I'd still be in a basement somewhere coding away in COBOL. So, from the management consulting world, I ultimately rose out to be a director at a firm called PwC, where I was helping oversee wealth and asset management consulting, and got tired of traveling 365 days a year. And so I decided to go work for a client of mine City National Bank. And this is where I started to really own technology budgets and think about innovation from the inside out. And that was a really unique perspective that I still utilize today. City National Bank, largest regional bank in the US at that time. Very antiquated old school tech stack, still very close architecture in terms of their approach technology as well as investment product and I helped trying to open up all of that and take them into the cloud and using enterprise SaaS and also third party products and doing, you know, kind of serving in more of a fiduciary role for clients.

And then I went from there to Invesco and did a similar job more on a global scale, helping run innovation and strategy primarily in our wealth management division. And again, trying to upgrade a very sleepy tech stack and getting this old school business that had largely grown through acquisition with a lot of bolt-ons into more of the modern world. Then I was running around Silicon Valley so much, and catching up with all my friends from high school who were doing really cool things in tech and VC. And I was like, “Man, you guys are having way more fun than I am!” I'm dealing with corporate politics and bullshit budgets, excuse my french.

And so I ended up leaving Invesco to join SoFi as an early team member, and I started seeing companies like Lending Club, Prosper, and Wealthfront and a few other businesses starting to emerge at that time. I was like, “Wow, all these banks, where I've been helping implement enterprise software, I see how far behind they are!” There is real opportunity here for independent technology companies to disintermediate.

So, that was really the first wave of Fintech, if you think about it, it was the disruptors and the rebels trying to go after the incumbents. That is easier said than done. And so it was a great experience and being there early and understanding, you know, how a startup works and wearing many hats and so on.

From there, I went to business school at Stanford, I was a Sloan Fellow, which is a one year kind of accelerated cliff notes version of an MBA at Stanford and it was a great experience. A lot of network building and, you know, meeting with entrepreneurs at Stanford and building my network around Venture and so forth. And I thought from there, I was going to be able to be a VC and had a number of friends and venture who told me you need to go get a bunch more operating experience. So I did that.

I did it in many different roles, I actually effectively started advising and working in a number of C-level roles at a variety of different companies from an e-commerce company to a consumer products business, to a Fintech marketplace, to an enterprise software, FinTech and got a lot of different skills very accelerated— it was kind of like a crash course and operating and met some incredible people along the way. And also sat with, you know, hundreds of VCs.

I recognized that there are two types of VCs, there are those VCs who do their diligence, show up and then write you a check. And then you never really hear that from them again, unless there's quarterly financials or the company's in trouble.

And then there's the second type of VC that checks in with their companies on a weekly or daily basis. And it's more of a family relationship and they're actually adding tremendous value. And you really feel sincerity, that they are there to support you beyond the return of capital. And that's the type of VC I definitely wanted to be and work with and quickly figured out who those VCs were, it was very black and white.

And I think some of the larger VC platforms like Andreessen and Sequoia, the reason that they've thrived, they've actually set up you know, demonstrable infrastructure to support entrepreneurs, because they recognize that fact and that their brand and reputation is only going to persist if they truly add value and move the needle for their companies.

And then, you know, from my various roles, I decided to go into venture initially just as an angel investor putting small checks into companies, and then ultimately into partner seats at a platform called Formation Group and then Light Street Capital. Before I actually went back to SoFi in 2017, at the behest of the board and the CEO to build out our corporate development office to leverage our balance sheet. And then to make minority investments through a platform. SoFi venture— I did that for about a year before the management team very publicly turned over. And I decided to take what I had built so far and spin out to form Fin VC.

Just a quick blurb on Fin VC and then I'll pause. We are FinTech nerds through and through. We invest really strictly in B2B Enterprise SaaS, we have a global purview. Our flagship fund really primarily focuses on the US and Europe and Israel. But then we have a joint venture in the Middle East, North Africa— we're investing in regional FinTech companies. And we're in the process of launching, hopefully this summer, a JV that will focus on Asia Pacific, both Southeast Asia where there's a significant amount of emergence and China proper. So pause there happy to answer other questions.

Jon Low

My understanding is Fin VC is an early stage,venture capital firm, and but when you say early stage, do you mean specifically at the seed?

Logan Allin

Totally. So the way we think about investing in venture and private equity is actually pretty barbell. So we have early stage funds that will invest— let's call it Seed + — which is post product post product market fit. So they've got a product in the market, they've got some revenue typically that's around 500K, hopefully a RR and we'll come in and we'll lead and we'll price seed plus rounds.

We truly believe the data largely shows this from Cambridge Associates and frequented pitchbook that entry point is actually one of the best value for money plays in venture capital.

If we miss the seed plus or we haven't gotten conviction at that point, we'll go in at the Series A. We very rarely entered the Series B particularly these days just given more street views have been priced in the round sizes. You are getting quite a bit of dilution. And for an emerging manager like ourselves, our first fund is a small $61 million fund, we need to be very careful about managing dilution and going capital intensive businesses. And so that's our early stage strategy similar to our MENA strategy, exact same entry points, similar cheque sizes, which range from 500 K to 2 million and seed to two to 5 million in series A.

Alongside that, we believe the future of venture is what I've described as multi strat or multi strategy, which you hear a lot of times in the hedge fund world. That means we think that LPs need to have visibility into your strategy, clarity on the risk that you're taking, and what that means from a return profile very specifically. And so, you know, giving them visibility that, hey, our flagship fund is only going to invest in these types of companies and these specific countries. And it's good to have this type of risk profile and this type of target return, and then our regional strategies are going to be a different proposition.

But then the second part is they definitely want optionality in terms of co-investment. And so in the co-investment side, where we provide access as a long side of our fun direct to cap table, no fee structure, and then in growth in late stage opportunities that are not inside of our early stage funds, because they're not a stage fit. But we've got conviction and can get really excited about the thesis and get unique access either in the form of a primary co-investment or on a secondary cap table clean up. So we've done three of those deals, and we're about to do our fourth. So by the end of May, we'll be at a total of 15 portfolio companies on the platform.

Jon Low

Great, thanks for sharing. And you know, just as you were talking about the type of VC that Ffin VC is being more of— family oriented, adding value beyond just capital, being there available for your founders and your portfolio— what doesn't seem to come across as very obvious in your LinkedIn or on the website, which is something you shared earlier, is that you've had this really rich experience in the financial industry as almost like a builder, both an innovator and someone who was driving initiatives by aligning stakeholders and trying your best to bring them to the table or steer in one direction.

So, it's almost like yes, you understood the industry from a product perspective and stakeholder perspective. And would you say enables you to have some empathy and insight into the process that, you know, up and rising founder talent have to go through to actually bring their solution to market?

Logan Allin

Yeah, Jon, you should write our pitch decks. That was really well articulated. I definitely thought about that. And that's part of our DNA. My personal view in this is maybe harsh, but I just don't think you can legitimately be a good VC— and I'll define what I mean by good— if you haven't been an operator, right, if you haven't walked 10,000 miles in an entrepreneur shoes and gone to meet with 100 VCs and been told you're nuts, which very much happened to me many times.

You have no clue what that day to day looks like and how much stress was involved in being an entrepreneur and how much passion and emotion is involved. So, empathy and putting myself in the entrepreneur’s shoes and thinking from their perspective is something we do very regularly. And I think if you talk to all of our CEOs, they would very much align with that.

We talk as a peer versus down to them.

So, I find a lot of VCs who haven't been operators and who may have been for example, former investment bankers, turn VCs or turn PE invest— they just don't have that empathy and they're looking at the company is very much black and white, whereas there is a material amount of gray, and are in evaluating that it simply can't be pure science.

And then, you know, from a culture standpoint, and you know, we're very transparent with our portfolio companies around where we can add value. And we do that even in advance of investing. So one of the things we do is we provide a lot of business development support, because we're B2B oriented.

Our companies and prospective companies are naturally looking for customers. So, we look to make those introductions early and often. And that does two things. One is it shows, “Hey, we have conviction on what you're doing so much that we're going to introduce you to some of our most important relationships.”

Number two, we're going to add value from day one and this is going to continue even though we're not even investors yet.

And number three, it helps us diligence the business right if that entrepreneur goes in and crushes it, and converts customers— that gives us a significant amount of insight and feedback in real-time. And I don't see a lot of VCs doing that. And so we think that's a differentiator for process and how we approach entrepreneurs.

The second part is that raising capital sucks, right? That is the biggest drain on an entrepreneur's time. And we know that we recognize that. And so we're hugely expeditious. In our funding in our evaluation process, we're very quick no, because we're thesis oriented. And I'll touch a little bit more on what that means. And we're a longer yes.

But we're very transparent with how our process works, what diligence we're going to do, and we keep them informed throughout. If you're ghosting entrepreneurs, you don't deserve to be a VC. You need to be providing very direct feedback. So, for example, when we're leading around or providing a term sheet, we actually signed a term sheet and then an entire explanation of why we've positioned the terms of the term sheet the way we have, specifically around valuation.

I feel like a lot of VCs will just, you know, kind of finger in the air point point to a safe, convertible safer convertible capitalization, cap and discount on a price round, some kind of, you know, valuation, they pulled out of thin air based on a recent round comp, like, they just don't do the work. And then they don't explain it to the entrepreneur, so there's no transparency.

And then the third thing that we do is we really try to help them think through talent sourcing, and every VC will tell you this, like, we've got a great network of talent, and we're going to go help you hire a bunch of people. Well, that's interesting, but evaluating as a former operator, like where we can really move the needle with talent, and what types of roles are going to be really critical to that business itself and tailoring that approach is, is usually critical.

Usually, that takes the form of at least in our experience, a kind of CEO president type who might be the gray hair, so to speak with younger founders, and then to his CFO, right as you start to professionalize your control, financial controls your reporting and your process. And you're having, you know, advanced discussions around going out and raising more capital, and on the capital side will literally take a hands on approach as a quasi investment bank, but we're not charging anything for it.

It's just part of the relationship to help them raise and syndicate future rounds. We've done that for all of our companies. And we have a very long list of syndicate partners that we work with both LPs as well as groups in the ecosystem that we actually think add material value, which is which is, you know, a small subset. So that's, that's how we think about it. Yeah, hopefully, that's helpful.

Jon Low

Thank you. And, and you know, I'm, and being that involved in thoughtful through process, even with entrepreneurs that you might not invest in, and then to entrepreneurs that you do invest in and then throughout the lifecycle of their company. As you think about being this boutique hands on, venture capitalist, how have you thought through your ability to, to scale the number of investments without losing touch with each and one of your portfolio clients?

Because my understanding is that at the early stage, to actually make your venture economics work, you have to make more investments than say, someone further down the line. And how you kind of set yourself up structurally amongst your team or process or your advisory networks to ensure that that bespoke value can continue beyond just yourself.

Logan Allin

Yeah, that's the key question. And we spend a lot of time on management of the firm culture at our firm. And how do we create a scalable model? So, the first part of that equation and it's something I mentioned earlier, which is a top down macro thesis, driven approach to identifying the types of investments we're wanting to make.

So, the problem with traditional ventures is that it gets knocked in many cases, this is reality for being very, you know, spray and pray. And that's not a strategy. A strategy is identifying where you see whitespace and new opportunities for emerging technologies at the earliest stages to take a foothold and expand and scale.

So, in the FinTech world, we have gone through a quantitative analysis, spoken to entrepreneurs, spoken to university systems, spoken to accelerators, and then importantly, spoken to prospective customers about where pain points exist and where those opportunities are.

We've also followed the money, right? So, if you look at the last 15-20 years in FinTech, the money's gone into payments, robo-advisory, consumer lending and SMB lending, right, those four areas are pretty saturated here in the US now that differs by geo. But by and large globally, those four areas are pretty played out.

So, we're not really looking for new companies in those spaces. We're very much looking for companies that are looking at things like insurtech blockchain. Real Estate tech, enabling technologies like cybersecurity and AI, machine learning. And then areas of asset management capital markets, which still have quite a bit of room to run on the technology side. And then within those sub sectors, we're putting together thesis statements and then we're proactively going out and sourcing companies that align to those thesis statements.

So, when I'm talking to entrepreneurs I've invested in the past or fellow VCs we collaborate with, I can say, we're looking for a company that does x. And just as an example, and this is one of our reasons why we're investing in financial services, and looking specifically for B2B enterprise companies is that the financial services industry spends more money on tech than any other industry, including governments in the world, they spend over a trillion dollars per year on technology, only a portion of that. But a growing one is on innovation, the rest is just on maintenance, keeping the lights on, yet, only 8% of their data is in the cloud. And they're in dead last.

So, they're number one in spend— dead last in cloud adoption. So that tells you that there's quite a bit of a gap in the ecosystem that can be made up by new and emerging companies. But click because clearly, the incumbent software companies haven't solved that problem. So we're actually actively looking and one of our thesis statements is, it is hard for financial services firms to migrate from mainframe technology to hybrid or full cloud technology.

Why is that? Well, it turns out that mainframe technology and transcribing the data and the functionality from those mainframes into Cloud based technology is really hard. And it usually requires a couple hundred bodies from Accenture, IBM to do it manually. Well, that's a technology solution waiting to happen. And it turns out there's a bunch of Seed and series A companies working on that exact problem. And we're looking for them, right.

So that's number one. And what that does is it allows you to create a repeatable investment process that you can go out and utilize over and over again. And that's our approach. And that's our template that we think is pretty unique. And obviously, a lot of our investment success will rely on how good our thesis iteration and testing is.

Then, secondly, from extending the firm, we're a lean small team, I've got a partner, two venture partners, and I've got a couple of associates, right and so we largely all work as a single team and support our portfolio companies.

We stay organized through our CRM system around business development, support, capital, introductions and talent, and we very much track on you know which of our companies needs the most help and we meet every monday and we talk through new investments, existing portfolio companies and how to be helpful to them and then capital needs across our own firm as well as at the portfolio company level.

So, it is definitely challenging and it ebbs and flows in terms of what companies are going to need the most of your attention and, and support. So, that's how we think about accessibility and just continuing to hire at the associate and the senior associate level. And then we also culturally provide carry economics to every single person on our team. Number one, and then number two, we provide total transparency from associate all the way through to general partner, what metrics do you need to hit to get from role to role, so we find that that is very much aligned creates the right type of monitoring culture, but also gives people comfort that they have a career path and goals to strive against.

Jon Low

That's Excellent, thank you for sharing and being so transparent with your internal processes and just because we have a minute left, I wanted to ask you a question that might be slightly personal and slightly professional. But, you know, on on a deeper level on the inside, you've been in, in venture for quite some time you've played the long game, you know, you've taken the advice from mentors, not to rush into venture, go advise, go get involved operationally, and you actually took that track, right. And so what keeps you in venture like, what why is it important for you to be in venture other than just, you know, falling where the wind blows initially, like a lot of us do in our early careers, right?

Logan Allin

Yeah, no, absolutely. So it's a great question. It's the question you have to ask yourself every day and reaffirm as to why you're in this business. For me, the answer is pretty crystal clear. I wake up every morning excited to work with entrepreneurs, and that's where I get my energy from, even though I'm an introvert. So I'm an INTJ. If in case anybody follows Myers Briggs, Bill Gates is also an INTJ. But it's he's far, far more advanced than I am.

But I still have this extroverted view of wanting to help and wanting to help first and creating that culture. And so I get my energy from helping entrepreneurs and being hands on supporting them. And that's why I'm in venture, I can help them avoid the same mistakes I did as an entrepreneur. And I can help them create game changing companies that are truly going to support one of the most important industries in the world in the form of financial services. And if I can lend my expertise and my network to helping them do that at a more accelerated rate, then the outcomes around financial return are going to be there and our LPs will be significantly rewarded for that.

But unless you're hyper passionate about working with entrepreneurs, and being hands on and supporting them, I just don't think pure play financial return people make good VCs, right?

As I mentioned earlier, I think if that's your only goal, you're gonna get ground down pretty quickly. And so you need to have a lot more to position yourself around from an energy from a being present to what's getting you excited to how you can make an impact, right? So I think from a social impact, from a legacy perspective, this is my last job. This is all I want to do the rest of my career. And so I take a very long view on relationships on discussion, how we're building the firm and how we're making decisions. So, I really appreciate the opportunity and thanks for the time, guys.