May 8, 2017 · 23m · top-founders
653: She Invests $120 Million Into Financial Tech Companies, 39 Graduates, 6-8 New Per Year with New York Partnership Fund CEO Maria Gotsch
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The Top podcast, host Nathan Latka interviews Maria Gotsch, President and CEO of the Partnership Fund for New York City, discussing the fund's evergreen investment model, the FinTech Innovation Lab, enterprise tech procurement trends, and the strategic dynamics of fintech acquisitions.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 44.3% of the talking time here. How this is scored →
Nathan as informed peer 3.7 Guest teaching 3.8 Guest disagreement 1.2 Nathan pushing back 1.3
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 2:03 Gotsch rejects government funding premise
Maria immediately rejects Nathan's assumption that she operates in a government role, clarifying that the fund represents private corporate leadership.
Hardest push from Nathan ▶ 14:38 Nathan presses on bank capital contributions and debt structureNathan interrupts to clarify whether expanding bank partners are injecting new capital and drills down on whether returned capital constitutes debt repayment.
Biggest teaching moment ▶ 2:03 Educating host on the 45-year evergreen civic fund structureMaria explains the unique non-profit investment mechanism established by Henry Kravis, disabusing Nathan of standard venture fund and 501(c)(3) write-off assumptions.
Nathan holds their own ▶ 15:52 Nathan leverages Wealthfront interview to analyze bank disruptionNathan demonstrates domain familiarity by quoting Wealthfront's tax-loss harvesting strategy from a previous episode to challenge Maria on bank displacement.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| The Partnership Fund's Civic Evergreen Investment Model | 3 | 6 | 2 | 2 | Nathan begins by assuming the fund is government-run and asking if it operates as a standard 501(c)(3) tax write-off. Maria systematically educates him on Henry Kravis founding the evergreen civic vehicle with 45-year interest-free corporate loans. | |
| Macro Trends in Enterprise FinTech and Blockchain Cycles | 4 | 4 | 1 | 1 | Nathan inquires about enterprise FinTech demand. Maria shares insider observations regarding the 'big three' enterprise priorities and explains how financial institutions are currently digesting their initial blockchain bets. | |
| Portfolio Highlights: Data, Cybersecurity, and RegTech Successes | 5 | 3 | 1 | 1 | Nathan asks Maria to pick portfolio highlights across core verticals and displays external research by citing Digital Reasoning's headcount and 74 million dollars in raised venture capital. | |
| Creating NYC Jobs and Expanding Banking Partnerships | 3 | 4 | 1 | 2 | Nathan probes how out-of-state companies are encouraged to create NYC jobs and questions whether participating banks contribute fresh capital. Maria explains that the original 120 million dollar fund recycles exit returns dynamically. | |
| FinTech Disruptors, Point Solutions, and Bank Acquisitions | 6 | 5 | 2 | 2 | Nathan cites insights from his interview with Wealthfront's CEO regarding automation eating bank margins. Maria counters by pointing out that soaring customer acquisition costs and regulatory burdens force most FinTech point solutions into incumbent acquisitions. | |
| Mid-Roll Sponsor Segment: Health Packets for Busy Travelers | 1 | 1 | 0 | 0 | Nathan performs a mid-roll travel health supplement sponsor read, conducts the standard Famous Five rapid-fire closing questions, and wraps up the show. |
Statements from this episode (12)
Henry Kravis raised Partnership Fund's capital in the late 1990s
“Henry Kravis of KKR raised the funds in the late nineties, and he raised them from major, major corporations in New York, as well as individuals.”
Partnership Fund operates as a civic evergreen vehicle without profit motive
“We're structured as an evergreen fund. So the investors put up the money not to make a financial return, but to try to create jobs and expand the economy in New York City.”
Partnership Fund holds investor capital for 45 years to reinvest returns
“So we have the investor's money for 45 years, and if we make returns, it comes back to us to fund new projects.”
FinTech Innovation Lab accepts six to eight startups per year
“So the FinTech lab, we've had 39 graduates. We're going into our seventh year, so it is really an elite program where we take in between six and eight companies per year.”
FinTech Innovation Lab receives roughly 150 to 160 applications per year
“So we get about 150, 160 applications.”
FinTech Innovation Lab takes small warrant coverage from all participants
“Initially, we take a very small warrant coverage and everybody that comes into the lab. Now we will invest in some of the graduates post program, but the program it's, but that's a separate, that's separate from the lab.”
FinTech Innovation Lab exclusively accepts B2B or B2B2C startups
“And the program is 100% B to B or B to B to C. So we're doing no direct to consumer companies in the program.”
Data, security, and risk management consistently top financial CIO priorities
“So consistently since the beginning, there has always been what I call the big three data, security, risk management, currently known as RegTech, but basically it does a risk management. So those three categories have been on the top of the CIOs list since the…”
Enterprise interest in distributed ledger enabling tech will rebound by 2019
“And I predict that in like two years, there will be an increased interest back in more enabling technologies that will help fit around the distributed ledger, but the core systems, people have made their bets.”
Partnership Fund has deployed $160M from its initial $120M capital base
“Out of the hundred and twenty million, we've actually made one hundred and sixty million investments.”
SoFi is a rare exception among consumer fintech startups scaling independently
“So I think people like SoFi are the exception to the rule. Where you're able to, you know, come in with a new product that the, an area where the banks are not paying it, you know, are not working for whatever reason, and then expand to be a big company.”
Scaling fintech startups will ultimately partner with or be acquired by incumbents
“I think you're going to see most of the companies end up being when they get to a certain size or asset size. Partnering or acquiring with a large institution because they have the regulatory expertise and they have the distribution power.”