Capital One to launch VC unit to invest in fintech

Less than two years after spinning off its last venture capital unit, Capital One plans to launch another VC group to invest in early-stage financial technology companies, according to two sources.

The VC unit will be led by Jaidev Shergill, the people said. Shergill is currently head of digital venture investing and startup business development at Capital One, according to his LinkedIn profile. Earlier in his career he founded and ran the VC unit at Citigroup, which became known as Citi Ventures.

Capital One, which since the VC unit spin-off has been investing directly in early-stage fintech companies, will not be raising a fund for the unit but will rather be investing off its own balance sheet, one of the sources said. It is not clear what people at Capital One have been responsible for those earlier direct fintech investments or their relationship to the new VC unit.

This will not be the first VC unit created at Capital One, a McLean, Virginia-based credit card, banking and financial holding company with $297 billion in total assets as of year-end. In November 2012, Capital One spun off North Hill Ventures after the Volcker Rule provision in the 2010 Dodd-Frank financial reform law made it difficult for banks to invest in such funds, the source said.

With offices in Boston and San Francisco, North Hill Ventures invests in financial services and fintech companies, according to the firm’s website. The venture firm has two funds: North Hill Ventures LP, a 1999 vintage, raised $100 million; a second pool, launched in 2001, collected $70 million.

Capital One had been the sole limited partner for both funds.

With its spin-off in 2012, North Hill Ventures replaced Capital One as its only LP with investors including Hamilton LaneFort Washington Capital Partners and the Oregon Investment Council.

Officials for North Hill declined comment. Shergill and Capital One did not return repeated calls for comment.

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