BBVA Shuts In-House Venture Arm, Pours $250M Into New Fintech VC Propel Venture Partners

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BBVA — the Spanish banking giant that acquired Simple in the U.S. and last year made a $67 million investment in still-stealth mobile-only bank Atom in the UK — is changing up how it plans to invest in fintech startups in the future.

The company is shutting down its in-house venture arm, BBVA Ventures; and it is taking BBVA Ventures’ portfolio, the $100 million fund it had allocated to the group, and another $150 million, and putting all of it into a new VC called Propel Venture Partners, based in San Francisco and London.

BBVA will be a limited partner in Propel, a fintech VC that will focus on payments, credit, insurance, wealth management, e-commerce, security and compliance.

Propel is not announcing any new investments today alongside those BBVA made in the past, but there is one — in lending startup Earnest — which had never been disclosed before but is quietly being made public now. TechCrunch understands that BBVA made a strategic investment in the startup’s most recent $275 million equity and debt round (BBVA invested on the equity rather than debt side).

Other investments include Prosper, wealth management advisor Personal Capital, and Taulia.

Propel will operate out of San Francisco and London, and the idea will be to use the increased funds to expand both the size and frequency of investments made into the fintech sector, both in the U.S. and Europe.

That will include both investments in new startups, but also follow-on rounds for those already in the portfolio, according to Teppo Paavola, BBVA’s chief development officer and GM of New Digital Business (who had also previously led BBVA Ventures), who I met earlier this month in London.

It’s not clear whether Propel is currently raising more beyond this initial $250 million — we are trying to find out. The bigger market seems to be pointing to a general contraction when it comes to raising new funds, although startups that are picking up customers and generating revenues are still able to make bank.

So if BBVA is still clearly interested in investing in startups, why the move to a separate entity? Two reasons, it turns out.

The first has to do with the mindset of working with corporate venture funds. BBVA, we understand, was finding that some startups believed that they could get better support from the traditional VC structure than working with a large banking entity.

The other is that in the U.S., BBVA’s previous Ventures fund was structured to that it was limited to investing only up to 5% in any given round. (This is one reason why Atom was a BBVA investment and not one from BBVA ventures.) Now it will be able to put in much more.

The new U.S. fund is a Small Business Investment Company, a scheme to help channel investment to small businesses. “The SBIC gives us flexibility in stake size, which we didn’t have when we were a corporate fund,” said a spokesperson for BBVA.

“In an increasingly competitive fintech venture capital environment, we believe that our increased capital, Propel’s independence and a presence in London can enable us to invest in the best fintech start-ups and better support BBVA’s vision of using technology to change financial services for the benefit of the customer,” said Paavola in a statement.

Jay Reinemann, Tom Whiteaker and Ryan Gilbert are Propel’s managing partners. Reinemann and Whiteaker were previously managing the BBVA Ventures fund, and Gilbert has been actively involved in several global financial services startups as a founder, investor and independent board member. The company is now hiring for its London office.

“Propel believes that the future of financial services will be realized by rethinking and rebuilding, not merely disrupting. We look forward to partnering with energetic entrepreneurs for the long term, driving ideas forward together, backed by BBVA and its commitment to support digital change in financial services,” said Reinemann in a statement.

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