Mark Casady's Vestigo Ventures is like and unlike other venture capital firms.
The Cambridge, Mass.-based company invests in early-stage startups it thinks might transform entire industries. If they do, handsome returns could follow. But all venture capital firms do that; seek companies with that potential, however improbable. Vestigo is a Latin word meaning “to search.” A venture: an undertaking involving chance, risk, or danger.
Vestigo’s focus on the financial services and insurance sectors hardly differentiate it either. Numerous venture capital firms agree that, although stodgy, those industries are rife with costly products, poor services, and tremendous room for improvement.
What makes Vestigo unlike other venture capital firms is Casady and the others behind it. Their familiarity with the old informs their decisions about what’s new. They evaluate as many as 100 different companies before making an investment because they’ve seen so much already, he told RIA Intel.
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Casady, 60, co-founded Vestigo in 2015, shortly before he retired as Chairman and CEO of LPL Financial, the largest independent broker-dealer in the country. He also previously had long stints of employment at Northern Trust and Scudder Investments (which became Deutsche Bank’s DWS).
Dave Blundin, a general partner at Vestigo, co-founded and is the chairman of Vestmark, a TAMP with 4.5 million accounts and more than $1.4 trillion in assets. Mike Nugent, a managing director at Vestigo, founded and was CEO of Cobalt Software, a performance analytics and investment data solutions for more than 100 alternative investment managers. Another co-founder and managing director at Vestigo, Ian Sheridan, held executive positions at ADP and MassMutual and previously was an analyst at Goldman Sachs.
Its advisory board is packed with other high-profile executives, including Jarrett Lilien, the president and COO at WisdomTree Investments, and Maliz Beam, the former CEO of the Retirement Solutions business at Voya.
The collection of partners and others has attracted many investors — even companies that could potentially be disrupted by the startups Vestigo is supporting. About half the venture capital firm’s major investors are from insurance companies and asset managers. The others are family offices and individuals.
Vestigo’s two funds have invested $143 million in 23 companies. Notable companies it has capitalized include Alloy, which mitigates fraud and provides anti-money laundering services to banks. It received $40 million in series B funding in September.
It favors seed and Series A rounds of funding raising between $1 million to $3 million, and it’s often the lead investor. Capital invested in those young, often bootstrapped, startups can “make the difference between being able to launch the company and move to gaining market proof and market price,” Casady said.
But Casady has recently seen opportunity in helping older companies raise capital to transcend their industry.
In October, Vestigo and Karl Roessner, the former CEO of E*TRADE, formed Lefteris Acquisition, a special-purpose acquisition company, or SPAC, with plans to take a private financial technology company public. It plans to target businesses valued between $600 million and $1.3 billion. Casady will be the chairman and Roessner will be the CEO and Director of the new company.
Going public “helps a company obtain financial freedom,” Casady said. Lefteris means “freedom” in Greek. Lefteris has met with several companies eager to go public, but thought they weren’t ready. For example, some needed to improve their customer satisfaction or account systems.
No matter the growth stage of a business, Casady is not only on a financial mission, he’s on a social one, too. He established Vesitgo and the SPAC to build business that will “help the industry be more inclusive.”
“If you lower the cost of a service, you get more people to participate. If you make that happen, you can expect them to expand to markets that were previously underserved,” he said.
Much of the opportunity in the future lies in better digital tools and automated services, for both customers and companies. But those efforts, while saving time, won’t necessarily eliminate jobs. They can “free up the branch manager to deal with customer problems, which is a much better fit for their capabilities.”