Venture Capital Fund Acts as Intermediary Between Credit Unions and FinTech | Journal of Credit Unions

Due to their smaller size and scale compared to banks, many credit unions struggle to get the attention of fintechs. A new venture capital offering aims to solve this problem.

The Curql Fund, which announced its first closing in April, now has 30 credit union investors and has raised more than $ 100 million.

The fund was launched in 2020 and is managed by Next Level Ventures, the largest investment firm managing credit union assets, together with the credit unions of Member Development Company CUSO. It is led by a group of former founders, operators and leaders of the fintech and VC spaces.

One of its participants is the Idaho Central Credit Union, a $ 7.3 billion asset, located in Chubbuck, Idaho. CEO Kent Oram said the company is proud to partner with other forward-looking organizations by investing in the Curql Fund.

“On our own, it’s difficult to make inroads into the world of fintech. By combining resources, we plan to cultivate relationships and solutions to improve the offerings we provide to our members, ”said Oram.

Next Level has recognized the need to provide access to technology for the continued growth and stability of the credit union industry, according to NLV Managing Partner Craig Ibsen.

“The mere fact that this fund has been established and credit unions are showing up as investors at a faster rate than expected is a clear indication of the importance the industry places on technology,” said Ibsen.

Chris Otey, president of South Bay Credit Union in Redondo Beach, Calif., Said any involvement in fintech is good for the credit union movement.

“Understanding what fintech solutions are out there to eat your lunch, sell you your lunch, or have lunch with you is a daunting task,” said Otey, who is also chief revenue officer at CU 2.0, which works to match credit unions. and fintech. solutions.

The Curql Fund – and others like it – have the potential to start leveling the playing field for credit unions, Otey said. CUNA Mutual Group launched CMFG Ventures in 2016 as a venture capital arm focused on strategic start-up investments in the credit union, financial services and insurance industries.

“Understanding what fintech solutions are out there to eat your lunch, sell you your lunch or have lunch with you is a daunting task,” said Chris Otey, president of South Bay Credit Union.

“As we see financial services broken down into their smaller parts by fintech solutions specializing in these small parts of the industry, banks and credit unions are faced with creating their own solution to compete, in s’ partnering with fintechs to provide those solutions or buy solutions, “he said.” Credit unions should leverage their cooperative philosophy to help the industry as a whole move forward and stay competitive. “

Curql offers a key competitive advantage as a gateway for fintech access to credit unions – and the only gateway that can deploy money at VC speed, Ibsen said.

Vincent Hui, managing director of banking consultant Cornerstone Advisors, said it would be interesting to see how many credit unions can invest in the fund and others like it, as they may not be considered an authorized investment by regulators. .

“That said, CUs invest in CUSOs where fintechs have an important role, such as VyStar’s investment in the Nymbus CUSO,” he said.

Hui said large credit unions like the VyStar Credit Union, with $ 10.7 billion in assets, in Jacksonville, Fla., Haven’t always had difficulty accessing fintechs, but their Smaller counterparts might find it difficult to grab their attention due to their size and the volume generated.

Michigan State University Federal Credit Union in East Lansing, Michigan was an early investor in the Curql Fund. President and CEO April Clobes said the $ 6.2 billion-asset credit union believes the fund creates opportunities for credit unions to make collaborative investments in fintechs to improve the experiences of their members.

“By partnering with fintech, we can provide robust digital services and remain competitive in the financial services industry,” she said in a press release.


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