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Banking & Finance

Investors Commit $545M To Local Venture Capital Firm

By Jenny Callison, posted Jan 22, 2020

A venture capital firm co-founded in February 2018 by Live Oak Bancshares chairman and CEO James “Chip” Mahan announced Wednesday it has received major investor commitments.

Canapi Ventures, which invests in early- to growth-stage financial technology companies, has been promised $545 million from a “robust” institutional investor base, according to a news release.

The investor base is a group known as the Canapi Alliance, the release stated. The Alliance is composed of more than 35 banks and strategic investors “seeking attractive investments and greater partnership with the fintech ecosystem.” It includes 11 of the top 50 and 23 of the top 100 banks in the United States by total asset size, according to the release.

The American Bankers Association, the Independent Community Bankers of America and several state banking associations are also Canapi investors, the release stated.

“Much of the financial services industry is running on software created decades ago, and we are at an inflection point where that has to change,” Mahan said in the release. “Canapi is here to connect banks to the innovators who aim to make that change happen and truly revolutionize the fundamentals of our industry.”

Canapi Ventures, located in Wilmington on the Live Oak campus, is jointly managed by Mahan and Gene Ludwig, the founder and CEO of Promontory Financial Group, now an IBM company. Promontory Financial is a regulatory and compliance consulting firm for financial services and fintech companies.

“Banks are looking for technology partners that can help them thrive and innovate in a rapidly changing and hyper-competitive market,” Ludwig said in the release. “We believe many of these solutions have to come from early-stage companies and that is why we launched Canapi Ventures.”

Savvy early-stage company founders seek more than capital, Ludwig continued, stressing the importance of an investor’s “Deep domain expertise and an ability to help fintech companies tangibly grow revenue and customers. We believe our model is unique in that it aligns the interests of both banks that want to use innovative technologies as well as the companies creating those technologies and represents a true ‘win-win’ for all parties involved.”

In 2019, Canapi made its first investment: the recipient was Built Technologies Inc., a provider of cloud-based software to the construction lending industry.

“In a short period of time, Canapi has emerged as one of our most valuable investors,” Chase Gilbert, CEO of Built Technologies, said in the release. “Canapi's industry relationships and knowledge of financial services have been transformative for Built.”

Correction: This version corrects the Independent Community Bankers of America's name.

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