There are many banks serving start-ups, but most outside of a few niche lenders, like Silicon Valley Bank, limit their financing to debt rather than equity. Wintrust decided in 2015 to see how equity investing would work alongside conventional debt offerings, and so far CEO Edward Wehmer likes what he’s seeing.
“It was a good race for us,” he said in an interview. “Two losses for every big winner.”
He declines to say what the overall gain is for Wintrust Ventures.
Winners have included The Mom Project, which connects employers with new mothers recently released from the company’s workforce who are looking for part-time work; Cohesion, a software company serving office owners; and Foxtrot, a specialty supplier of beer, wine, snacks and prepared foods.
Now a $50 billion asset bank, Wintrust was less than half that size when it launched its venture capital arm. Senior Vice President Bailey Moore, who launched the unit at age 28, remains at the helm of Wintrust Ventures. This was an unusual approach for a commercial bank which, like most such commercial lenders, focused on established businesses that were profitable.
At the time, it was considered a kind of experiment. The test was clearly passed.
Wehmer expects this new round of $50 million to be allocated faster than the first round. “We will also be restocking all the time,” he says, as investments are liquidated.