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Sheel Mohnot: How I Got Married in the Metaverse; Founder vs Product vs Market | E1035

Sheel Mohnot is a Co-Founder and General Partner @ Better Tomorrow Ventures, a $225M fund that leads rounds in pre-seed and seed-stage fintech companies globally. Sheel and Jake (his co-founder) invested for many years together before founding BTV and wrote checks into Mercury, Flexport, Ramp, and Hippo Insurance to name a few. As for Sheel, before BTV he ran 500 Fintech for close to 7 years, and before that was a founder, founding two companies, both of which were acquired. ---------------------------------------------- Timestamps: (0:00) Intro (2:07) Advice for Young VCs (4:07) Why Fund Sizes Are Too Big (11:09) Investing in Emerging Markets (15:46) Investing in Europe (16:54) Investing in Fintech (19:44) Which VC firms will win over the next 10 years? (24:50) The Biggest Misconceptions About Venture (25:52) How Sheel Raised His First VC Fund (37:16) Why Sheel Launched an Accelerator (41:49) When You Should Take Money Off the Table (44:53) The Biggest Mistake VCs Made in the Past 2 Years (46:13) Founder vs Product vs Market (48:30) The Story of Warren Buffett and Mrs. B (51:32) The Biggest Reason Why Great Founders Fail (53:59) Will multi-stage VC firms quit investing in seed stage startups? (57:40) The Biggest Source of Tension Between VCs and Founders (1:00:23) The Biggest Source of Tension Between GPs and LPs (1:03:44) Thoughts on Founders Who Run VC Funds on the Side (1:06:00) How Sheel Got Married in the Metaverse (1:10:01) Quick-Fire Round ----------------------------------------------- In Today’s Episode with Sheel Mohnot We Discuss: 1. VC Needs to Change: Why does Sheel believe that VCs should have smaller funds? What are the biggest misalignments between founders and VCs today? What are the biggest points of friction between VCs and their LPs today? 2. VC in 10 Years Time: Who are going to be the winners in venture in 10 years time? Who are going to be the losers? Will micro-funds be bigger or smaller as a segment of the ecosystem? Will solo-GPs be bigger or smaller? Were they a zero-interest rate phenomenon? 3. The Errors of a Bull Market: What does Sheel believe are the single biggest mistakes made by VCs between 2020-2022? Did Sheel take liquidity off the table in the last few years? What have been some of his biggest lessons on when to sell? How does Sheel evaluate the flood of capital into emerging markets in the bull market? What happens now? Fintech is also experiencing the same challenging time, how does Sheel assess what is happening in the fintech financing market today? 4. Building a Fund: Lessons, Mistakes and Advice Scaling to $225M: What are the single biggest mistakes Sheel and Jake have made in the fun scaling? How has it impacted their mindset? What does Sheel know now about fund management that he wishes he had known at the beginning? What advice does Sheel give to emerging managers today, raising their first and second funds? ----------------------------------------------- Subscribe on Spotify: https://open.spotify.com/show/3j2KMcZTtgTNBKwtZBMHvl?si=85bc9196860e4466 Subscribe on Apple Podcasts: https://podcasts.apple.com/us/podcast/the-twenty-minute-vc-20vc-venture-capital-startup/id958230465 Follow Harry Stebbings on Twitter: https://twitter.com/HarryStebbings Follow Sheel Mohnot on Twitter: https://twitter.com/pitdesi Follow 20VC on Instagram: https://www.instagram.com/20vc_reels Follow 20VC on TikTok: https://www.tiktok.com/@20vc_tok Visit our Website: https://www.20vc.com Subscribe to our Newsletter: https://www.thetwentyminutevc.com/contact --------------------------------------- #SheelMohnot #BetterTomorrowVentures #HarryStebbings #20vc #venturecapital

Sheel MohnotguestHarry Stebbingshost
Jul 16, 20231h 15mWatch on YouTube ↗

At a glance

WHAT IT’S REALLY ABOUT

Fintech VC Sheel Mohnot On Fund Sizes, Pivots, And Metaverse Weddings

  1. Fintech investor Sheel Mohnot discusses his path into venture, why he believes early-stage investing should stay founder-driven, and how bloated fund sizes and misaligned incentives have distorted the VC industry.
  2. He explains why emerging markets and fintech aren’t ‘dead’ but badly mispriced in 2020–21, why multi-stage ‘spray and pray’ strategies at seed backfire, and how he thinks about follow-ons, secondaries, and DPI.
  3. The conversation dives into LP–GP dynamics, raising and sizing funds, the role (and limits) of value-add platforms, and why accelerators still matter if they’re focused and hands-on.
  4. It ends on a lighter note with the story of his Taco Bell metaverse wedding and how he balances saying yes to unconventional opportunities with staying disciplined as an investor.

IDEAS WORTH REMEMBERING

5 ideas

Right-sized funds outperform asset-gathering behemoths over the long term.

As fund sizes swell, managers become more price-insensitive and must chase only massive ($10B+) outcomes, which are rare; Sheel argues truly returns-focused firms should cap or even shrink fund sizes instead of optimizing for management fees.

Follow-on capital should be used selectively, not reflexively.

Blindly pro‑rata into every ‘hot’ markup round often means overpaying and missing slower-burn winners; Sheel stresses using follow-ons to back companies with real progress and urgency, while being honest internally about clear underperformers.

Fintech isn’t dead; the 2020–21 hype cycle is.

He sees fintech returning to its pre-bubble trajectory: still a huge share of global GDP and natively digital, but now with healthier competition, fewer copycats, and better entry prices after an unsustainable wave of funding and overvaluation.

Emerging markets investing must reflect liquidity and risk realities.

Great companies can and do emerge from markets like LATAM, Africa, and South Asia, but exits are fewer and harder, so seed valuations must include a significant discount; paying ‘developed market’ prices in those regions was a major 2021 error.

Multi-stage ‘spray and pray’ at seed can poison later-stage access.

When big platforms let juniors write many small seed checks into competing startups, they often block themselves from later leading the category winner’s Series B or C because founders resent them backing rivals for learning or option value.

WORDS WORTH SAVING

5 quotes

No one knows what they’re doing. There’s no single right way to do venture.

— Sheel Mohnot

We didn’t want to be in the asset accumulation game. We wanted to be returns-focused.

— Sheel Mohnot

Raising five on twenty-five has destroyed much of the seed industry.

— Harry Stebbings (endorsed strongly by Sheel)

Invest in the best company, not number two or number three. A lot of people funded the wrong banking-as-a-service players just because they missed Unit.

— Sheel Mohnot

Founders with funds who are leading rounds while running a company—that’s bonkers. When things go wrong, you can’t be fully there for both.

— Sheel Mohnot

Sheel’s journey from founder to fintech-focused VCFund sizing, LP dynamics, and incentives in venture capitalFollow-on strategy, secondaries, and measuring performance (DPI)Fintech and emerging markets: boom, pullback, and what’s nextSeed vs multi-stage strategies and the problem with ‘spray and pray’Accelerators, value-add platforms, and supporting foundersFounder–market–product fit, pivots, and why startups fail

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