Lessons from Sheel Mohnot

Sheel Mohnot is a prominent fintech investor and co-founder of Better Tomorrow Ventures.

On Fintech and Investing

On the potential of fintech: "Financial services are close to 20% of global GDP. And it's all about numbers: any exchange of money is an exchange of a number to another account. That means it's an inherently digital product. And yet it's been pretty untouched by technology." [1]
On the future of fintech: "The next generation of fintech companies probably looks very different than the last... the last was a lot of bringing stuff that was offline online and I think the next bit will be genuinely new stuff." [2]
On his investment focus: "We take a pretty broad view on fintech. So there's a lot of companies that other people don't necessarily think about as fintech that we do. As an example, vertical SaaS. We think most vertical SaaS companies ultimately will get a lot of their revenue from fintech." [3][4]
On embedded fintech: "We think a lot of the SMB software is like Toast and Shopify will ultimately be driven by financial services." [3]
On the importance of trust: "There's a bit of trust erosion... SVB fallout and other things... that causes people to think twice about a new finance application... it's really important in any new fintech product to build trust." [2]
On opportunities in the current market: "Companies that take deposits are in relatively better shape [in a market of higher interest rates]." [2]
On being opportunistic vs. thesis-driven: "At seed stage, it's definitely easier to be opportunistic than it is to be thesis-driven because who knows what's going to come along." [2]
On why fintech remains exciting: "I recently signed up for a new credit card and they asked me to fax a form... there's a huge opportunity to build companies that make life easier for people." [3]
On the human impact of fintech: Mohnot believes in fintech's potential to solve meaningful, real-world problems, especially for underserved populations. [5] This passion was sparked by his time at Kiva.org and living on less than $2 a day in India to understand microloan recipients. [1][5]
On "AI Washing": Mohnot discusses the trend of companies claiming to use AI without it being core to their product and what it means for a startup to be genuinely building with AI. [6]

On Startups and Founders

On the nature of venture investing: "Venture investing is a 'people business at the seed stage'." [7]
On what he looks for in founders: "More than anything else, he looks at the founder's vision while investing in companies. Everything else changes, but a founder's ability to execute their vision and be relentless in that pursuit is what attracts a deal." [7]
On the importance of integrity: At the seed stage, it is mostly about investing in people with high integrity. [7]
On founder-market fit: He gravitates toward immigrant founders who have a certain work ethic and hunger for success. [1] "Because they've been through the struggle, or their parents have, immigrants have tended to do better." [1]
On capital efficiency: "A huge learning for me is invest in capital efficient businesses. Businesses that constantly need venture capital dollars to acquire customers just aren't as good businesses." [8]
On common startup pitfalls: He often discusses common pitfalls for early fintech startups. [3][4]
On finding product-market fit: He recommends asking customers how they would feel if they could no longer use the product. If the response isn't overwhelmingly negative, you don't have product-market fit yet. [9]
On the danger of free products: "A lot of times, people think that they have product market fit because they're they're giving something away for free." [9]
On strategic pivots: Mohnot emphasizes the power and importance of strategic pivots for startups. [9][10]
On founder learning: “My favorite founders all love learning, and they love learning something and then teaching me about it.” [11]

On His Personal Journey and Philosophy

Favorite Quote: "People don't want to do new things if they think they're going to be bad at them or people are going to laugh at them. You have to be willing to subject yourself to failure, to be bad, to fall on your head and do it again, and try stuff that you've never done in order to be the best you can be." [12] This quote is attributed to surfer Laird Hamilton. [5]
On success: He also favors a quote defining success as laughing often, winning respect, earning appreciation, finding beauty, and leaving the world a bit better. [12]
On his motivation: "I just love getting to meet people who have cool ideas for changing the world in a small way and helping them make that a reality." [1]
On materialism: After living on a dollar a day in India, he learned, “There are very few monetary things that make me happy, I just don't need any material things to be happy.” [11]
On his background: "As an immigrant or child of immigrants, you learn how to make do on a little and you have a certain work ethic and hunger for success." [1]
On becoming a VC: He started angel investing on the side while still a founder and "realized that helping founders directly is what he truly loves." [1]
On building his fund: He and his partner are "building the fund that we wish we had when we were founders." [2]
On adventure: Mohnot has traveled to around 80 countries and met a co-founder for his auction business on a 40-hour train ride in India. [13]
On taking risks: His favorite quote from Laird Hamilton encapsulates his investment mindset: "You have to be willing to subject yourself to failure… and try stuff that you've never done." [5]
On his parents' influence: His parents, who were immigrants from India, instilled in him a love of altruism. [1]

Learnings and Reflections

Lesson from competing with Stripe: He learned valuable lessons while building his first company, FeeFighters, and competing against the payments giant. [3][4]
The Power of the Power Law: Working at 500 Startups taught him the impact of the power law in venture returns. [8]
Regret about not selling: "My biggest regret and my biggest lesson is that I didn't [take chips off the table] because I believed in Sequoia's 'hold on to your winners never sell your winners'... I should have sold more when I had the chance." [8]
The end of an era: "The low-hanging-fruit era of tech… it just feels over." [14] He notes that the era of building simple consumer software and apps for easy money has concluded. [15][16]
The new "hard tech" era: Mohnot observes that Silicon Valley has shifted to a "hard tech" era focused on AI, where the chatter is about acquiring powerful hardware like Nvidia H100 graphics cards rather than building fun photo apps. [15]
AI makes ambitious products easier: "It's amazing what you can build [with AI]... I spent a lot of time programming as a kid... and then for the last 15 years I haven't created any code. And then just last week I did again for the first time." [13]
Founders don't need a banking background: "They need to understand how financial technology works. And that does not require one to work with banks." [7]
The importance of a large market: "I look for founders playing in a big market... ultimately, you have to be able to build into a larger market." [7]
Customer acquisition is harder: In the current climate, customer acquisition has become significantly more challenging for new companies. [2]
The value of experience: His experience as a two-time founder taught him "not just how to build, but how to sell, iterate, and bounce back." [5]
Don't confuse loud fans with market scale: He cautions founders against mistaking a vocal niche audience for a large, scalable market, using the example of "PFM apps for budget nerds." [5]
On being overhyped: "If something's too hot I kind of have like an allergic reaction to it which is maybe good but also I think has probably hurt me at times too." [3]
On competition: "In fintech especially in the crazy times of 2020, 2021, like every single company we invested in had four or five well-funded competitors and they were all doing roughly the same thing." [3]
On closing his 27-year-old bank account: He recently closed his first bank account from his teenage years because the incumbent bank hadn't kept up with technology, noting "the app sucks" and "it's a real pain." [13]
On getting better deals with modern finance apps: He moved to Robinhood for its better margin line rates compared to Schwab, highlighting the efficiency and cost savings of modern fintech platforms. [13]
On avoiding brain damage: He prefers services that are simple and don't require calling customer service to get a better deal or a refund for a wire fee. "I don't want to spend any brain damage thinking about this." [13]
On fundraising during the pandemic: He recalls the difficulty of raising his first fund in March 2020 when "everyone pulled out including people who had signed everything." [2]
On his firm's name: The name "Better Tomorrow Ventures" is intended to be optimistic. [3]
On the importance of in-person connection: Despite his metaverse wedding, he emphasizes bringing friends together and creating community, such as through his firm's "Camp BTV" events. [3][13]
On his unique life experiences: From appearing in a Justin Bieber video to getting married in the Taco Bell Metaverse, his varied experiences reflect an adventurous and unconventional approach to life and business. [3][4]
On the future of work culture: The shift to "hard tech" is making Silicon Valley workplaces less about fun perks and more about productivity and performance. [15]

Learn more:

Lessons from Sheel Mohnot

On Fintech and Investing

On Startups and Founders

On His Personal Journey and Philosophy

Learnings and Reflections

Written by Antoine Buteau

Lessons from Rex Salisbury

Lessons from David Epstein