Mouro Capital says fintech is about to change

0:00Welcome to Path Founders with me, Mike Butcher, where we like to unpack the code, the capital and the consequences behind the startup ecosystem. Today, I'm joined by Manuel Silva Martinez, General Partner at Muro Capital, as the firm announces a major new milestone, a$400 million first close for its third fund, backed by Banco Santander, taking Muro's total commitments to over$1 billion. Muro has been investing at the intersection of financial services and technology for more than a decade, backing companies such as iZettle, Ripple, Trulayer, Upgrade, Creditas and Klar. But this new fund lands at a very different moment.

0:46FinTech is no longer just about challenger banks and payment rails. As AI moves into the operating core of financial services such as customer services, compliance, capital markets, wealth management, basically you name it. The firm says it has already made seven investments from the new fund, including Levin Labs, Sakana AI, Alinea and Burbank, pointing to a thesis that fintech is being rewired by AI data regulation and infrastructure. So in this conversation, let's unpack what Muro is really seeing from the front line, where the next wave of fintech value will be created, why Banco Santander is doubling down, and how financial services incumbents are thinking about AI.

1:33Thanks very much for joining Path Founders, Manuel. Thanks for having me. Well, let's start with the news. You've just announced a$400 million first close for your third fund. What do you think will change about your strategy with this first close and obviously heading towards the final close and what will stay the same? Well, as you say, it's a major milestone for us. So$400 million of fresh money to really power the intersection of financial services and technology. As you were saying in the introduction, we've been doing this for 10 years. We have roughly 70 companies in our portfolio. And so over the years, we've built a really consistent strategy where ultimately we try and advance where the conversation is and try to back the entrepreneurs who are really thinking about that anywhere across the world, really, Europe, US, Latin America.

2:23So from that perspective, that won't change all that much. I mean, we think that ultimately there's always a conversation. Financial services is everything. And because it's everything, there's always a part of the industry that's being innovated upon, right? I mean, certainly thematically, we keep our thesis updated. And of course, AI is a big chunk of what we're seeing today. It's permeating every business, every experience, every technology. It's changing the way banks think about their people, their customers, etc., etc. And so it's no surprise that out of the seven new investments we've made, 60, 70 % of those are heavily AI driven.

3:00But not only. I mean, there's many other places or many other parts of the industry that still require innovation, technology. Right, well that's all very fair, but perhaps you can elucidate a little bit more about Banco Santander's involvement. What's the size of their commitment and how involved are they and what's your relationship with them? Yeah, so today they've been funding all the programs they've been running. So you're mentioning a billion dollars, that's roughly the commitment they've made to us over the years. But the beauty of our model is that we operate independently from them, meaning that when we talk to an entrepreneur, they know that we're 100 % aligned with them, with their interests, with their success, because we ultimately invest for money.

3:47Now, obviously, because we're thematic investors, everything we do is relevant not only to Banco Santander, but to many other banks and just the industry and the entrepreneurs we invest in. And the relationship with the bank is primarily driven by that kind of soft relationship where I want to believe they learn from us, they learn from what we see, they feed into their strategy, what is in our portfolio, what is in our pipeline. And conversely, the bank can be an amazing partner to our portfolio companies. Many of our portfolio companies actually work with the bank commercially or as design partners.

4:18And the plan is to really keep on creating value at that junction in the future. But I understand that they're taking the full amount of this first close. doesn't that kind of skew you a little bit towards their direction? How do you convince founders that you aren't effectively just another arm of a bank? No, it doesn't. I mean, the way we operate is market. We close deals at the same speed as our Silicon Valley counterparts, so to say. I mean, many of our entrepreneurs would vouch for us to line in with them. And our returns ultimately are top decide, meaning they were just as good as anybody else.

4:59But of course, the value add we offer relies to some extent in our access to Bank of Santander. So that's quite helpful to many of our entrepreneurs. Okay. Perhaps you could tell us a little bit more about your strategy, because I know that you've already invested in companies like Eleven Labs and Sakana AI. A lot of people might not immediately think of those as fintech companies. So how do they fit your strategy? Yeah, no, that's a great question. And that's why we try to stay away from the word fintech and really think about that financial services meets technology concept, right? Because at the end of the day, and those are really two examples, there's many, many companies out there that are creating really valuable technologies that can apply to banking, but not only.

5:42In the case of Eleven Labs, for example, which is a conversational technology, banking is a big industry for them, as is consumer and maybe defense and maybe government, right? Sakana is a bit more specific. is actually our first ever Japanese deal, and they're developing language models for the banking industry in Japan and hopefully outside of Japan with us in the future. So we always try to make sure that every single company we invest in has an applicability to financial services or insurance. And sometimes, as you say, it's not all that obvious, but there's always a backstory that makes it valuable to our ecosystem.

6:17Well, in this news announcement, you've actually mentioned governance, risk and compliance as an opportunity. And that's rather interesting timing. We just literally ran a live podcast with Richard Kohl of Compliance, the AI startup, about this subject. I know it from her, but let me hear it from you, why you think GRC is becoming an important investment category. Oh, we're obsessed with it. I mean, the reality is that a regulatory change can create a new market and can change the behaviors of all the agents in the industry. And with all the new, let's say, risks and all the volatility of the market and the new technologies that are coming in, we can identify a new risk or something that needs to be taken care of pretty much every day, right?

7:09And so that's why we pay so much attention to that space. In addition to that, I mentioned we're global investors. 40 % of our money usually goes to the US, 40 % to Europe, and 20 % in that time. So even from a comparative perspective, the way regulation evolves in all those different geographies is tremendously different and creates very different opportunities. So we've always been extremely, extremely excited around that space, especially when it comes to securing the pace of transformation of the industry, making sure that banks and customers remain safe and sound in the way they deal with their money.

7:43You're also talking a lot about capital markets and wealth management areas as areas that are being affected by AI. Do you want to unpack that a little bit more for us? Yes, no, that's a great point as well. I mean, ultimately, if you take a step back, a new technology is typically a way to democratize something, right? So, for example, in WealthTech, which historically is WealthTech being the products and tools for private banking and affluent customers. historically those have been very humanly driven they've been you know you have your banker you have a pretty offline interface and that was really hard to uh to service but with new technologies ai and others uh you're able to bring the same kind of experiences to maybe a lesser tier of clients and ultimately you could even if you take it to the extreme bring asset management services to the bottom of the pyramid right and that whole transition and the democratization that technology allows is extremely exciting when it comes to focusing on that.

8:42And AI ultimately is the ultimate equalizer of all of that to some extent. Well, yeah, AI is the great equalizer of all time, it would appear. But, you know, in the pre-AI era, Muro backed companies like iZettle, Ripple, True Layer, Upgrade, etc. And those are quite different companies compared to many of the companies coming through the pipe now. What's your observations as being a longtime investor in the difference between a previous era of startups and entrepreneurs to what's going on sort of right now in 2025, 26 with the rise of AI? That's a great question. I mean, I started my investing career in 2009.

9:28And at the time, I would say most of the, I mean, banks were extremely backwards. And to some extent, most of the innovation was just what I called business model innovation. So all you had to do is start something that's already in existence with the fresh slate of a 2010 technology. And that's why, if you look at our old portfolio, it's about neobanks. It's about doing the things that banks do just better. That trend somehow has exhausted itself a bit, both because banks have managed to evolve. I mean, banks are quite technological these days and they've caught up with that. And so what we're seeing now is that the driver of innovation is less so of a business model innovation becomes more of a tech innovation.

10:12So now tech, deep tech is what's really driving the novelties in the space. And so while our thesis, so to say, has stayed consistent over those 15 plus years, it is true that now we focus way more on how pure technology is affecting the industry because business models are not to be reinvented anymore. some extent okay well um yeah i mean i think it's very much all changed isn't it um i noticed also that you've uh you reserve capital for follow-on fundings and you've got a as far as i can tell you've got a historical 66 follow-on rate um what is changing at the moment and how the follow-on strategy is is being affected by what's going on is it changed is it is it more or less sort of keep sailing in the same direction or do you think there's more follow-on or less follow-on that happens in this this era yeah i think i think it's a different follow-on i think over the years investors have become a little bit more a little bit smarter on how they use their money uh and and by that i mean they underwrite things better and they work way more with entrepreneurs in making sure that the companies get what they need right so back back in the days a lot of it was just you know one page term sheet here's an amount of money here's evaluation and off you go I think right now the collaborative aspect of fundraising is way more interesting and way more effective.

11:37But also, obviously, I cover Europe and Latin America for the fund out of our London office. And of course, the funding situation in Europe has had ups and downs. And so also one thing that's important, one thing about follow-ons is how do you play the funding gaps, especially at the later stage side? And how do you partner with others to make sure your companies get what they need? So certainly, the, you know, the following strategy for any funds is somewhat market dependent. But on the other side, you know, a good investor, and we think we're good investors, would make sure that as we come into a new name, as we come into a new company, we reserve enough money to make sure that we can support them across their lifecycle, which, you know, sometimes can be 10 or 15 years.

12:19I see. Yeah. So it has clearly changed in some ways. You're also investing across, as you said, across Europe, North America, Latin America. It used to be the case that a lot of fintech was coming out of Western markets and then going into emerging markets. But now it's quite interesting to see some emerging markets producing fintech innovation that can even go in different directions into Western markets as well. Are those the kinds of things that you're observing or is it still a case of, especially in say for instance Latin America, innovating in a different way? I would say financial services have had a harder time exporting themselves and maybe other industries.

13:02So you see global platforms in commerce, you see global platforms in social media, it's harder to see global banks, global neobanks, although of course you have the case of Revolut and new bank that are becoming global or regional. So financial services tend to be mostly local and ultimately the local institutional factors that affect them are very important, right? So you mentioned Latin America, we spend a lot of time in Brazil, for example, which is a big market for us, where ultimately the way payments work, the way the capital markets work are extremely unique to that market. And as a result of that, Brazilians tend to innovate for their own country because they understand the market and things are tailored to them.

13:41And probably a Brazilian company would always be a winner there versus an imported company, so to say. Right. Having said that, it is true that, you know, also with AI, where ultimately the you know, the threshold to build a company has gone lower and lower and lower. Global companies can appear pretty much anywhere overnight. And so, you know, even just this morning, I was speaking with a Singaporean company. As I mentioned, we did our first Japanese deal this year, which is a novelty for us. So we keep an eye on the entire world because the best companies can really appear anywhere and really tackle any market pretty much overnight.

14:20You've done this first close. Presumably you're going for a bigger number. What is that number you're going to hit for a hard cap? And secondly, when you're talking to entrepreneurs right now, what messaging do you want to put out there about what kinds of companies you want to see pitching to you or what kind of entrepreneurs should think about when they're coming to talk to you in the near future? No, those are two great questions. I mean, in terms of fundraising, so as you mentioned, we'll pursue more efforts over the next few months. I mean, I don't want to commit to a number, but certainly, you know, we think that the opportunity is big enough for us to deploy more money than this for a hundred first million dollar close.

15:06In terms of companies that we're interested in, again, anything that's at their intersection of financial services and technology is fascinating to us. And I would certainly encourage anybody listening to take the broadest possible view to that. Because ultimately, we see commonalities with financial services where people may not. and we've helped companies in our portfolio that are not, as you were saying earlier, classic fintech, expand their product suite, expand their infrastructure through the knowledge we have of financial services and the connections we have, right? So I would certainly try and keep it broad.

15:38But again, within that, anything where a new technology is really useful in addressing a problem that wasn't tackled to now is probably what tickles our butt the most. Right, yeah. And it's so interesting you're saying almost like don't think about fintech, just think about what you're doing and how it might interface perhaps with other fintech technologies or platforms. Very interesting. I was going to say, for us, fintech is everything, right? It's the other side of the coin to the real economy. When people ask me, what is the size of your market? I say, well, it's everything at the end of the day, right?

16:15And I feel that labeling in fintech has not really helped many entrepreneurs that had really interesting ideas, but didn't have the right label because they were really innovative, get their ideas across. So let's keep it open and let's be surprised. Lastly, I know that you have done some Web3 investments. Can you tell us a little bit about where the idea of payment rails in Web3, stable coins, et cetera, are going and how that's sort of informing your strategy? Yeah, I mean, for us, our overarching thesis in crypto and Web3 over the past years has always been about creating efficiencies, right?

16:58Whether it's information efficiencies, pricing efficiencies, risk transfer efficiencies, and ultimately the whole stablecoin movement, which it's a real thing. I mean, I think it's still the early days of it and we'll see more of it, is another way of creating payment efficiencies in the world. And so we're really excited about that. I mean, again, back to my point about labeling, we were early investors in Ripple, which arguably is a first form of stable coins. And now, of course, they're launching their own. But then 10, 12 years ago, when we invested, it was all about FX replacement, right?

17:32So it's an old idea that we're still very bullish about and where I think we still haven't seen the last of it for sure. Very interesting. Well, we look forward to seeing what you do next and we'll be interested in covering some of the portfolio companies that come out of your investing over the next couple of years. But for now, Manuel Silva Martinez, General Partner at Mill Road Capital. Thanks very much for joining us.