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One of the fintech investing pioneers is Arjan Schütte, the founder and managing partner of Core Innovation Capital. He has been around fintech for more than two decades and has been an active investor for most of that time. I am way overdue in getting him on the show.
In this conversation we explore why 50% of Americans still live paycheck to paycheck despite fintech’s growth, the dramatic transformation AI will bring to financial services (moving from advice to actionable help), and emerging opportunities in small business enablement, healthcare-finance intersections, and retirement solutions. Arjan also reflects on early investment wins like NerdWallet and Ripple, lessons learned from setbacks like Synapse, and how his recent year-long family journey around the world opened his eyes to innovative financial models like Australia’s superannuation system that could revolutionize wealth creation for America’s middle class.
In this podcast you will learn:
- How Core is different from other VC firms.
- How fintech has improved the underbanked population in this country.
- Why fintech hasn’t made a bigger difference for financially fragile people.
- Some of the business models that work for serving this population.
- A look at some of his successful early investments.
- What he missed when he decided to invest in Synapse.
- What is different in the fintech space today than a decade ago.
- How he views AI when looking at early stage companies today.
- The different verticals within fintech where there is most interest today.
- Arjan’s perspective on the fintech IPO window.
- What he would do if he had a magic wand to help lower and middle income consumers.
- What he learned traveling around the world with his family for a year.
Read a transcription of our conversation below.
FINTECH ONE-ON-ONE PODCAST NO. 541 – ARJAN SCHÜTTE
Arjan Schütte: Not every company is going to be an AI company from a product perspective. Many will. And there is a lot of opportunity to reimagine how financial services will work. From, you know, like the advice that we get from help making choices. I really believe that the last 30 years have given us better and better financial advice. And I think what the average person needs, much more than advice, is help.
Peter Renton: This is the Fintech One-on-One Podcast, the show for fintech enthusiasts looking to better understand the leaders shaping fintech and banking today. My name is Peter Renton and since 2013, I’ve been conducting in-depth interviews with fintech founders and banking executives. Today on the show, I’m delighted to welcome Arjan Schütte, Managing Partner at Core Innovation Capital, a seed stage VC firm that’s been focused on fintech for financial inclusion for the past 15 years. Arjan explains Core’s unique investment thesis and their vision for creating a trillion dollars of net worth for everyday Americans through technology innovations that improve how money works for people leading challenging financial lives. We touch on the dramatic impact that AI will have on financial health. We discuss work being done in small business enablement, the intersection of healthcare and finance, retirement solutions and much more. Now let’s get on with the show.
PR: Welcome to the podcast, Arjan.
AS: Thanks, Peter, I’m excited to be here.
PR: Yeah, excited to have you. Let’s kick it off by giving listeners a little bit of background. I know you’ve been doing Core for a long time, but just maybe tell us sort of what led to that and some of the highlights of your career to date.
AS: Totally, happy to. I grew up in the Netherlands, so like you, I’m an immigrant. I came here as a teenager, and I fell into a startup during college. I’ve basically been in startup land for 30-something years. I started making interactive CD-ROMs back when that was tech.
PR: Right.
AS: I spent a decade as an operator in a couple venture-backed companies, which really gave me, you know, kind of front and center exposure to what it looks like to start something from scratch and to hire people and fire people and raise money and lose money and sell a company or go public. Kind of the tail end of my last startup, someone gave me a book about a guy named Muhammad Yunus, who, as you may know, was the godfather of the microfinance industry. And that whole story blew my mind and really changed my career entirely. None of my previous startups were in the financial services space; they were all in the education space. And that really got me interested in what does life look like for the un- and under-banked here in the United States. And I started a think tank, helped start a think tank really, in Chicago, called the Financial Health Network today. It was CFSI back then. And started writing checks off the side of my desk, really was hoping to start a company. And instead Richard Branson bought the first angel check that I wrote. And so they’re like, I’m like a natural-born investor. I should do that.
PR: Ha ha ha.
AS: So that got me going on Core and Core, as you know, is really an experiment at doing well and doing good. And we’ve been writing those kinds of checks for 15 years now on the ambition of how do we make life easier for people who lead hard lives by technology interventions that improve how money works for them, their access to insurance, their access to healthcare, their access to housing. So we’re a fintech fund really, with a broader vision of creating a trillion dollars of savings and new worth for normal people.
PR: Gotcha. Okay. Okay. Let’s just talk a little bit more about that. What’s your investment thesis? Is this all early stage? I mean, what are you doing? And also, you’ve touched on it, but maybe just expand on how you’re different from other VC firms.
AS: Sure. Well, A: we’ve stayed on the straight and narrow in terms of stage. So for 15 years now, we’ve been writing seed in A checks. Others have gone to growth. Others have gone to different geographies. We’ve stayed in the US. Others have gone to different asset classes, you know, to crypto. And while we’ve been active in crypto, we’ve stayed, you know, US-centric, fintech seed and A. Within that, really, what makes us different is our worldview, probably. We’re not just writing checks into anything fintech. Really, every check that we write should aid and abet our vision to create a trillion dollars of new net worth. And we think that vision really aligns with where a mass market of American consumers want to go. Ignore Trump’s policies, but from an economic perspective, I think the fact that Trump exists is a function of a mass market of Americans feeling economically fragile, seeing the rest of the world move by. And that economic insecurity is having them vote with their feet. We think that that will, that demand, is what’s in the market, and people want greater financial security, more financial freedom, less financial fragility. Fifty percent of the US today, in 2025, is paycheck to paycheck. It’s crazy.
PR: Yeah, it is.
AS: That’s our worldview, right? So, like every check that we write, we are looking to address that in one form or another. Some of it is hard to recognize, you know, like we don’t do all direct to consumer. We do lots of B2B2C stuff, but everything that we do is in that ambition.
PR: Right. Right. So I want to talk about, as you look back over the last 20 years, you talked about co-founding CFSI, the Financial Health Network. I have a lot of respect for Jennifer Tescher and her team and all the work, the great work they’ve done for 20-plus years.
AS: Yeah.
PR: But with that in mind, why do you think we haven’t moved the needle enough for, like you talked about the masses, the low middle income population in America? Why hasn’t fintech moved the needle?
AS: Who says it hasn’t?
PR: Okay, but there’s still, you just said, like half the people are living paycheck to paycheck. I mean, I feel like if we were moving the needle, that would be 10 – 20% of the population.
AS: Fair. So what I think has improved a lot is the underbanked population. Like 10, 20 years ago when we started this journey there was a significant, twice the number of people who were un- or underbanked. That has improved a lot thanks to, you know, to the Chimes of the world and many folks who were part of that. You’re right. What hasn’t improved meaningfully is that people are still, too many people, are financially fragile, people’s cash flows are too volatile, that definitely remains. And I think that’s in large part a function of income, right? Like most people, it’s their time that makes their money, not their capital.
PR: Mm-hmm.
AS: And there’s been a huge shift from W2, right, like being an employee, to 1099, being a contractor. And for most people, the income associated with a 1099 income is quite volatile. So that’s a big shift that I think has made it harder. People also spend more. Culturally, we don’t save. You know, like we’re one of the lowest saving rate economies on the planet. That doesn’t help.
PR: Mm-hmm.
AS: Yeah, I think there’s a stigma associated with it. Lots of people want to, you know, like a ton of fintech innovators want to, you know, like be part of wealth management in some form or another, sell the enterprise, and not concern themselves with the gnarly complexities of, you know, like this big consumer sector.
PR: Right, right. Well, let’s dig into that too now. The unit economics of this segment, obviously, is a little different from the mass affluent or something like that, or the higher income people. When you’re writing checks, what are some of the things that you’re looking for as far as business models for good unit economics serving these lower-middle-income consumers?
AS: Yeah, from a business perspective, right, for lots of business models that reach this consumer, and of course, this consumer is so many different things also, right, it’s a huge segment. But I think it’s fine to generalize that, you know, like that transaction costs interchange, you know, in one form or another, is quite common, so you need to get many units even if, you know, the unit economics are smaller on a per unit basis. The good news for businesses is, you know, there’s, call it a hundred and seventy million Americans, who are making less than a hundred thousand, and many of those are living paycheck to paycheck. So there’s a huge amount of interchange, whether it is interchange, you know, like by name, or kind of as a look-alike that one can make in so many different business models. We just wrote a check to a company called Flex, which does HSA, FSA cards. And so, you know, like that’s not like a Chime type of interchange, but they are charging a 4% fee on products and services that meet HSA, FSA requirements, so that people can take advantage of the tax benefit and merchants can close on more sales. It’s a great win-win, and you know, like that’s a small per-unit revenue model. So that’s one. The other one that has been quite successful is like think of Credit Karma, kind of an affiliate sales. So if you can provide a great hook for people to come to you and look for access to other types of products, you know, there are companies who will pay a good bounty to get access to this customer, and lots of them. So that’s another business model we like a lot.
PR: Okay, okay, so then I want to talk about some of the early investments you’ve done. Some of them have been tremendously successful. I’m thinking about companies like NerdWallet, Opportun, in the blockchain space, you’ve got Ripple. Maybe like this was back in the, you made early investments in these companies, I think probably more than a decade ago with all of those three. What made you confident that these particular companies were going to be successful?
AS: You know, hindsight’s 20-20. It’s easy to, you know, to claim victories. I feel like having been in VC so long has made me much more humble in terms of, you know, one’s prescience, because there are so many bets I took that I had the same confidence that I thought would be great outcomes, and were not. The good news is, right, like the world’s best baseball players, bat .300, you know, like we’d be amazing if a VC could bat .300. So, you know, it was different things for different people, for different companies of the ones that you mentioned. You know, Ripple is really the outlier of outliers in our first fund. And that was a bet both on a completely new technology paradigm, distributed ledgers, cryptocurrencies, combined with a legendarily prescient founder, Chris Larsen. You know, Chris did E-Loan 20-plus years ago, then he did Prosper, then Ripple. He learned so much from his prior mistakes. All of those were incredibly forward-looking businesses.
PR: Mmm-hmm.
AS: And so, yeah, I don’t know. There was just something in my gut that said yes, you know, right person, like, adventurous new tech stack. You know, that’s gotta be a recipe for good. But again, I say that with a ton of humility, because there are so many bets I’ve made that have gone nowhere. So I’m grateful. You know, like, what do they say? Luck is when fortune meets the prepared.
PR: Right, right. Well, I do want to touch on one of those investments that didn’t go well. I want to talk about Synapse, and you were an early investor there. What do you think, looking back now with hindsight, what do you think you missed when you decided to invest in Synapse?
AS: Well, the BaaS model was prescient in that there were so many fintechs that were struggling so hard to do integrations with banks and providing a better interface both technologically and regulatorily made a lot of sense, but were still not well understood by most BaaS players. And so, that created challenges. And I don’t think those things were as baked as we’d hoped they would have been. Yeah, I’d say that was a challenge.
PR: Okay, let’s move on to your view of the overall fintech space today, because you’ve been doing this for 15 years, and back in the early days fintech was a lot smaller. I think when I started in 2010, I think around that time you knew every fintech company because there wasn’t, well, fintech wasn’t even the term then, but it was, there just wasn’t that much around. But then we saw the slow boom in the 2010s and then the takeoff in 2021, 2020 with the pandemic, and then, you know, sort of the correction. So now, as you’re looking back, what do you think is different today in the fintech space overall than it was maybe a decade ago?
AS: Well, talent for sure. There’s so much talent in this sector. There was talent then, but it was really, you know, like far fewer people. There are so many like top-notch founders and founding teams, either that have grown up in fintech or that are attracted to fintech. That’s the number one for sure. I’d say the world is a much more connected place. Open banking, even though, you know, like 1033 from the CFPB is officially, you know, like on ice, that has set into motion a world of open banking that we’ve really learned from Europe that exists now, right? Like the Plaids of the world and many of its peers provide an incredible set of connective tissue between all kinds of financial accounts which allow us to build all kinds of features and functionality that weren’t possible before.
PR: Right.
AS: That’s the second one. I’d say the third one is crypto. Crypto was, you know, like anemic, largely speculative, Mt. Gox, remember that?
PR: I do, yeah. Right.
AS: That’s like so long ago. Is crypto being used for all kinds of nefarious stuff? Yes, but so are payments. You know, like so are like, you know, completely on the rail payments. And crypto is really starting to see maturity in some enterprise use cases. Think cross-currency settlement, like what the Ripples of the world are doing. Think stablecoins, in providing international exposure to people who you know, like who live in truly highly inflationary environments. Access to the stablecoin is an incredibly powerful real-world use case. And then, Gen AI. There was not a whisper of that. I mean, what we talked about AI when you and I were first getting started were really, you know, I don’t know, heuristics.
PR: Right, machine learning for underwriting models. That was the big technology a decade ago.
AS: Yeah, exactly. Exactly. Not to be, not to be poo pooed; important stuff.
PR: Yep. Right.
AS: But Gen AI, LLM-based, self-learning models were, you know, like were not on the scene, and will absolutely transform what money looks like for everyday people entirely. And so when people say like, you know, fintech is dead. Oh my gosh. Like, I’m so much more excited today having the tailwinds of both crypto, open banking, and gen AI. There is 100% a next entire generation of fintech that we’re on the precipice of today.
PR: Right, right. So then, do you think that every fintech company is actually an AI company now, or how do you view AI as you’re looking at early-stage companies today?
AS: Number one, productivity. So we’re a seed investor. We think the seed dollar will maybe not go exponentially further, but, on its way to exponentially further. So there’s like an AWS moment on steroids happening with Gen AI. So a developer is like a, you know, is a cyborg, and can do so much more. Your 10x developer can be a 20x developer. And we’re seeing that. We’re seeing teams that are so much smaller develop so much more high-quality production-ready code. So that has nothing to do with their product. That is just their productivity. It’s important. So in that way, absolutely. From a product offering perspective, I think it’s all over the map. There will be a lot of new product offerings. But I think not every company is going to be an AI company from a product perspective. Many will. And there is a lot of opportunity to reimagine how financial services will work. From the advice that we get from help making choices. I really believe that the last 30 years have given us better and better financial advice. And I think what the average person needs, much more than advice, is help. Just help taking action. Hey Peter, you’re spending too much time, you know, too much on Starbucks. Okay, great. Like how many pitches have you seen, you know, that tell you that in one form or another? Many. So going forward, your app will just help you financial optimize. In the background, it will be moving your savings to a higher-yield savings, will be taking a little bit away and putting it into your 401k, will be making sure that you have just the right amount of insurance coverage and not what your insurance agent sold you per se, because of principal agent conflict, et cetera, et cetera. And you will give specific companies a permission to do that on your behalf, to take action.
PR: Right, yeah.
AS: Do you buy that?
PR: I totally do. I think it’s going, I mean, I think we’re probably a ways away from like totally autonomous AI agents running our financial lives, but it’s just, we’re gonna get incrementally, I feel like it’s gonna incrementally get there. I think it’s the most exciting thing that really can move the needle for everybody. We’ve already seen ChatGPT moving the needle for just so many people just to help them become more efficient. I think it’s going to, yeah, I think it’s going to be very exciting to see. But anyway, I want to talk about the different verticals within fintech. I mean, you mentioned stablecoins as something that’s really groundbreaking. What are the different verticals in fintech today where you’re seeing the most interest from the startups that come across your desk?
AS: We’re seeing a lot in small business enablement. In answering you, of course, I’m also talking our book; not even our book, but really our ambition, right? So like, the areas where we’re focused on writing checks are in small business enablement. We’re doing a lot at the intersection of healthcare and finance, right? If you think about the average person sitting around the kitchen table, they’re worried about the cost of healthcare and housing. And so we were looking at a lot of interventions there. Both such big sectors, and make such a big impact on every man and every woman. We’re really spending a lot of time around retirement and some really interesting technologies in the retirement world, whether it be to help us aggregate all of our retirement dollars in one place, there’s trillions of dollars of orphaned retirement assets, right? Like people switch job to job and you’ve got all these little 401ks. How do you put those in one place? How do you make sure that all these 401ks accumulate sufficiently so by the time you’re 65, you’ve got anything to retire on? And then how do you decumulate? We’re getting older and older. Like, how do you manage that decumulation? There are tons of really interesting interventions in what you call silver tech.
PR: Interesting. Yeah, that’s another huge growth area, as we get older. So then what do you think about the, you know, we’re recording this June 23rd, we’ve had the Chime IPO, we’ve had the Circle IPO this month.
AS: Yeah.
PR: Do you expect we will see the second half of this year be fairly active for fintech IPOs?
AS: You know, honestly, Peter, I was surprised by this wave.
PR: Me too.
AS: Trump came in and there was enthusiasm. Great. You know, like M&A markets, we had a couple of our portfolio companies hire bankers and start processes. There were a bunch of, you know, transactions that happened. Yay. And then tariff chaos ensued, and everyone ratcheted down. So I was really surprised and quite delighted at what looks like a much earlier and much more successful set of IPOs. So I’m optimistic. I think there’s a lot of pent-up opportunity. There are so many companies, unlike when we had this spate of SPACs, a bunch of companies that were not IPO-ready went public because there was economic incentive for them to do so. They got decimated in the public markets. Today, there are a bunch of companies that are quite mature and private and ready to go public.
PR: Right.
AS: Which I think will present a much more durable set of companies going public and doing well where the IPO is really what it is intended to be, the initial public offering, not the end of a journey, right?
PR: Right.
AS: Like the beginning of like, you know, of a much bigger enterprise building era, so I hope that, but it’s hard to say. You know, like the unpredictability of today is incredibly difficult to manage in and frustrating, although will present, I think, a very good opportunity for vintage, for this vintage in venture.
PR: Right, right. And it also seems to me that the fintech CEOs are a little bit more mature as far as expectations go. They’ve seen, we’ve all seen, the fintech IPOs of the, you know, whether it was a SPAC or whether it was a regular IPO in 2021, you know, many, most, all, I don’t know, many of them went down, over the next several years. And some have now been sold off and they’ve never actually regained their IPO valuations. So I think there’s a bit more maturity when it comes to the CEOs out there. So it means no one’s in a rush. And as you say, the unpredictability, it may mean, you know, all these companies are ready to go. And if something happens on the macro front or geopolitical front, which we’re also seeing, things might just be wait and see. But it will be, I think, that as you say, we have all the ingredients right now. But anyway, the last couple of questions I want to get to are a little bit more lighthearted, shall we say. If you could have a magic wand and change one thing or a couple of things, say, about the fintech industry today in how we approach financial inclusion or helping the lower and middle-income consumers, if you could change something, what would that be?
AS: Hmm. I would change the stability of their income. Cash flow smoothing is probably the number one solution to people leading better financial lives. Erratic cash flow is like the hardest thing, the most stressful thing, about being low-income. So if you can smooth that, there are lots of private interventions, right? Like we’ve looked at, you’ve seen them in your career and through your conferences. The early wage access world is part and parcel to cash flow smoothing. That would be the magic wand that I would wave.
PR: Okay, so last question. I was reading about you and found that you traveled the world for a year recently. I was unaware of that until I read about it just preparing for this podcast. Maybe you can just close by telling us a little bit about what that year was like and did it change your perspective as an investor?
AS: Hmm, where did you pick that up?
PR: I can’t remember where it was now, but I read it somewhere.
AS: Yeah, well, it’s true.
PR: It is true. Thank God. I was worried for a second.
AS: My wife and I took our kids out of school for a year and did what was really a lifelong dream. And we traveled around the world for 365 days. And, yeah, you know, like when you do the same thing for a long time, stepping back and taking perspective and looking again at, you know, like what you want to do when you grow up is a real gift. And to come back with new vim and vigor and excitement is, you know, really like a life gift. And then also being up close and living in a bunch of different economies in a bunch of different cultures. And we traveled through Europe and Africa, Middle East, Asia, Australia, really is exciting to see how people think about money, what financial products they have available to them, the apps they use. So it got me excited about innovation that is taking place not in the United States, and what of that can we import. One idea in particular, speaking of retirements, the retirement model in Australia really blew my mind. The superannuation thing.
PR: Yep, mmm-hmm.
AS: And I think that is a big idea and an idea that we’d like to explore more. And we might even incubate something here at Core.
PR: Yeah, Australia’s done really well there, and it is something that many, the whole country is fully behind, and I won’t go on about it, but I do, I think it’s one of the great things about the Australian financial system. There are many, but that is one of the great things.
AS: And the Australian superannuation model is the number one middle-class wealth creation schema in the last half a century.
PR: Yeah, I mean, it’s amazing how many blue-collar workers have a million-plus dollars in their superannuation fund.
AS: That is so exciting. So more to come.
PR: Yeah, yeah, it is. Yes, indeed. I look forward to that. Anyway, Arjan, it’s great to chat with you.
AS: Yeah, thank you, Peter.
PR: I really appreciate you coming on the show. Thanks so much. And yeah, have a great rest of the year.
AS: Thank you, Peter. I really appreciate it.
PR: Okay, see ya.
PR: After we stopped recording, Arjan and I continued to have a conversation about AI and the impact it will have on the finances of the masses. He liked the analogy of self-driving cars, where initially there was massive skepticism that this would take off given the risks and liabilities, but how it has quickly become a key part of the transportation infrastructure in the cities where they operate at scale. The same will happen with self-driving money, he argues. The AI advances that we are just now seeing will continue to get better, the risks will be mitigated, and we will have a vastly different user interface to most financial products. He argued that this will happen more quickly than I expect. Anyway, that’s it for today’s show. If you enjoy these episodes, please go ahead and subscribe, tell a friend, or leave a review. And thanks so much for listening.