New du Pont venture capital fund will back start-ups targeting low- and moderate-income customers
Ben du Pont talked about his firm's partnership with Discover, tech start-ups in the region, and research coming out of Longwood Gardens.
Discover Bank, the credit-card lender based near Chicago, last week launched a “mission-driven investment fund” to pump an initial $36 million into start-ups that “improve the financial health of low- and moderate-income people, communities and small businesses.”
In the mid-Atlantic region, Discover is partnering with pro money managers in Washington, D.C., and Delaware, where Discover has its banking arm.
“We want to fund entrepreneurs who have identified creative ways to benefit those of modest means,” Discover vice president Matthew Parks said in a statement. He’s out to prove that financial tech “can be both profitable and beneficial to the community.”
Discover’s Washington investment partner, ResilienceVC, is run by Vikas Raj, who’s been a start-up investor almost since he graduated from the University of Pennsylvania in 2004. That group will target “seed stage” financial-technology (fintech) companies screened by Financial Health Network, a Chicago nonprofit that advises lenders on reaching the “unbanked and underbanked.”
The Delaware investor is Chartline Capital Partners, a 13-year-old investment firm led by Ben du Pont and his business partner, Philip Stern.
Since the death of his father, former Gov. Pierre S. du Pont IV, in 2019 and of his great uncle, Irénée (Brip) du Pont, last winter, Ben is the most visible Delaware member of the family whose gunpowder and chemical company, DuPont Co., dominated the state for a century.
As that company receded, Gov. du Pont in the 1980s helped develop the state as a financial center, specializing in credit cards and tax shelters and other specialized services.
Ben du Pont took questions from The Inquirer about his growing venture capital firm, the scarcity of software start-ups in the region, and innovation at Longwood Gardens in Chester County, a former du Pont estate. Some responses were lightly edited for length and clarity.
Comcast, Glaxo, and other big companies cut their venture-capital units. What does Discover hope to gain by investing millions with you?
I’m generally not a fan of corporate venture funds. Companies tend to fund them in good economic cycles but not bad economic cycles when the [start-ups] need them.
But this is not a fund that’s looking for investments that are strategic to Discover. It is using Community Reinvestment Act money [the 1977 federal act obliges banks to make loans available in poor as well as rich neighborhoods where they do business]. They are making those required community investments.
An example of the companies where we invest is Tuition.io [a California firm headed by Scott Thompson, former chief executive of Montgomery County-based retail billionaire Michael Rubin’s ShopRunner shopping service].
You know about President Biden’s student debt initiative. The part that would forgive student debt is very controversial. A less-controversial program incentivizes employers to make employees’ debt payments as a recruiting and retention tool. That’s a very interesting service, and Tuition.io is developing technology for it.
How much does your firm invest in fintech and other venture capital?
In 2010 we started our first fund with $10 million. The second, $20 million. The third, our most recent fund, it’s $40 million. We invested in 10 companies. The next one will be $100 million. [The Discover investment is managed separately.]
Why don’t you invest more in Wilmington and Philadelphia area start-ups?
We look for them. This area has a strong biotech sector — companies like Incyte and Prelude. We expect to see more fintech investments in local companies. [For Discover] we are covering the mid-Atlantic area, a radius of about 200 miles.
Delaware is a place where you can get the political leaders in the room with the investors to talk about what we can do to attract more of these firms. We’re halfway between Wall Street and D.C. And we do attract some great start-ups.
The ‘fintech sandbox’, as we call it, is testing at some scale in Delaware [where fintech pioneers have included the makers of the Ollo credit card, BestEgg fast-cash loans, digital-payments giant PayPal’s small-business lending group, and student lender College Ave].
Delaware state government weighed proposals to draw crypto companies and pioneer blockchain-based ‘smart contracts’ but did not move quickly. Was that wise?
I’ve always been a crypto skeptic. I know why drug dealers and dictators want crypto.
I think there’s a lot of other innovation now under development that is making payments more seamless. That helps the underserved communities by growing the larger economy and creating jobs.
Chartline has several fintech investments on that thesis that we are about to make. For example, start-ups that help speed insurance reimbursements when natural disasters hit. Insurance [adjustment and claims-paying] is a long process, and a lot of contractors won’t do the work until the insurance is straightened out. This will help.
Longwood Gardens is doubling its indoor exhibits. You’ve also built more greenhouses. How long until we see start-ups and venture investments coming out of your plant labs?
Their garden technology is a marvel. They are creating new kinds of flowers, hybridizing, controlling humidity, soil, air, droplet sizes, all kinds of innovations for plants to flourish.
Last Sunday night they had drones as part of the fountain show. You can expect that you will be hearing more about [products and investments from] Longwood.