Stronghold launches $100M venture arm to invest in underrepresented founders and fintechs – TechCrunch

Payments infrastructure firm Stronghold has launched a venture capital arm to deploy $100 million of its balance sheet capital into startups and funds across three core strategies – underrepresented founders, fintech and web3, CEO Tammy Camp told TechCrunch in an interview.

Stronghold offers a suite of fintech and blockchain APIs and services, including integrated payments, clearing and settlement, according to its website. The startup, founded in 2017, has partnered with IBM to create a blockchain-based stablecoin for instant payment processing. It has raised $3.3 million in funding to date through its 2018 seed round, which was led by Dave Samuel of Freestyle Capital and featured participation from a host of angel investors in capital- risk and fintech.

The new venture capital arm, called Stronghold Capital, has previously invested in companies such as Sam Bankman-Fried’s Alameda Research and funds such as Precursor Ventures and Backstage Capital, both of which have a track record of backing founders under -represented. Stronghold Capital has invested in Alameda Research through a DeFi (decentralized finance) syndicated loan on the blockchain-based institutional funding platform Maple Finance, according to the company.

The fund seeks to invest in companies that can provide “two-way value” with Stronghold’s business lines, Camp said. She added that by investing directly in fund managers, Stronghold will also gain access to a supply pipeline for companies it may wish to support.

75% of Stronghold Capital’s current investments are in underrepresented or overlooked founders, Camp said. The venture capital fund plans to bolster its team this year and intends to hire expert investors in each of the three specific focus areas, she added.

Stronghold launched its own token called SHx in 2018, which is now listed on crypto exchanges, including KuCoin, and has a market capitalization of over $1.5 billion, according to the company. Businesses using Stronghold’s payment rails are rewarded with KuCoin, which they can use to offset their fees. They can also use the token to make DeFi loans to other businesses and manage internal governance processes, according to Camp.

The token’s traction among companies has spurred Stronghold’s growth in 2021 – the company says activity has “up fivefold across most metrics” in the past year. Camp said that traction served as the catalyst for launching the fund, a move Stronghold executives had long considered.

“I think payments and financials is a big space and it’s going to take a lot of players to be able to fulfill their mission because there are so many payment rails these days,” Camp said. “Being able to partner with other companies or fund managers to achieve this vision is something we are passionate about.”

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