Better Tomorrow Ventures has closed a $140 million third fund, which the firm is calling a drop in the bucket compared to its ambitions: It’s hoping to retain its boots-on-the-ground approach while leveraging more funds and freedom.
Now three years old, with portfolio companies like Peanut (and founders like device-focused investor Betsy Dorfman leading deals), Better Tomorrow Ventures is one of several female-founded firms adding capital despite an asset class’s long tail.
The San Francisco-based seed-stage firm, cofounded by Sheel Mohnot and Jake Gibson, is betting that several financial workflows remain painfully manual — and thus ripe for software-led disruption.
A Third Fund Designed For Post-ZIRP Discipline
The new vehicle comes in just beneath the firm’s previous $150 million fund, a purposeful sizing decision given the market has right-sized round sizes and valuations. BTV plans to support roughly 30 to 35 companies from the fund, with initial checks of $500,000 to $3.5 million. The firm also has an invested $75 million opportunity pool raised alongside its second fund that it still has the ability to put behind breakout winners if late-stage markets continue to thaw.
That restraint reflects where seed is headed. According to PitchBook data, median early-stage valuations returned to a simmer from their 2021 peak and round cadence normalized as investors favored unit economics over hypergrowth. For seed-focused specialists such as BTV, that adjustment boosts the storefront’s signal and reduces cost of ownership — especially useful in industries where follow-on capital was proving too dear.
Fintech Still Has Room To Run Here’s Why
The thesis is simple: despite a decade of fintech adoption, core financial services remain labor-heavy and compliance-bound. The bulk of underwriting, reconciliation, KYC/AML reviews and fraud operations are still handled using human workflows cobbled together with spreadsheets and emails. Studies by McKinsey and others have consistently found that finance opens up some of the greatest potential for automation, with significant portions of work being based on patterns that are predictable enough to be undertaken by AI or rules-based systems.
Macro tailwinds persist. Non-cash transactions are still growing across the globe, according to Capgemini’s World Payments Report, and embedded finance continues to force financial services into software used by merchants, fleets and SMBs. CB Insights has reported that while late-stage deal activity pulled back, seed and early-stage fintech rounds were relatively resilient, particularly in infrastructure, risk tooling and verticalized financial software.
AI and the Bottleneck of Accounting Functions
One business BTV is focusing on is accounting, where capacity constraints have been most acute. The AICPA has documented a crunch in the talent pipeline, and numerous industry surveys have shown that firms are turning away work because they don’t have staff. That opens a prime opportunity for automation — financial statement generation, the close-books process, audit preparation and surfacing anomalies can all be sped up using AI copilots and tailored data models.
BTV has invested in Basis, which recently secured a $34 million Series A led by Khosla Ventures to modernize finance team workflows; Layer, an embedded accounting platform for SMB software companies; and InScope, which automates audited financial statement drafting. The thread running through them all is narrow, high-value workflows where accuracy, explainability and integrations are as important as speed — a world where vertical AI combined with strong data governance might deliver an advantage over general-purpose tools.
Portfolio Signals And Regulatory Reality
BTV’s current roster serves as a window into its infrastructure-first thinking. Coast aims for payments to fleets and truck drivers, a segment under-tapped by modern expense management. Relay provides small businesses with cash management and banking tools. Unit, a banking-as-a-service company, resides in the delicate orchestration layer between software companies and their regulated bank partners — a category that has come under more scrutiny by U.S. regulators as of late.
The firm’s view is that regulation-aware infrastructure will be the hallmark of durable winners. The last two years have seen stricter exams and consent orders for several sponsor banks, and the message to fintechs was as clear as it could be: compliance and risk must be built in, not bolted on. That shift plays to platform strengths with strong onboarding, ledgering, monitoring and dispute resolution — capabilities that take the operational drag off customers’ books but satisfy supervisory demands.
Closing Outlook And The Opportunity Fund Choice
On the way out, cautious optimism returns. Fintech companies in the private sector, such as Chime and Klarna, have often been mentioned as potential candidates to try their hand in public markets, as well as names like Navan and Wealthfront. A stronger IPO pipeline would flow back to growth investors and ultimately down to seed by reopening the valuation stack. With an untouched, $75 million pool of opportunity left, BTV is set to lean into later-stage rounds for its most convicted companies if windows continue to open.
That said, the near-term playbook is rooted in seeds where product velocity, distribution efficiency and gross margin profile can be measured from early on. In underwriting-heavy products, BTV is selling AI models connected to proprietary data and clear loss-ratio improvements; in B2B payments and cash management, it seeks durable interchange or software margins rather than volume for its own sake.
What to Watch Next as BTV Deploys Its Third Fund
Despite heady valuations, as BTV deploys Fund III, we are monitoring three signals:
- Whether seed fintech pricing holds at disciplined levels
- If compliance-forward infrastructure continues to take share from speed-first incumbents
- If accounting and finance AI products cross from copilots into true system-of-record territory
