Wall Street

Hedge fund billionaire Steve Cohen's venture capital group is on a fintech tear

Key Points
  • On Tuesday, a mobile credit card startup called Extend will announce it has a $3 million investment led by Steve Cohen's Point72 Ventures along with others.
  • It is just the latest in a recent spate of investments for Point72 Ventures, which started two years ago to look for opportunities in the world of financial startups.
Hedge fund billionaire Steve Cohen's venture capital group is on a fintech tear
Hedge fund billionaire Steve Cohen's venture capital group is on a fintech tear

Hedge fund billionaire Steve Cohen's venture capital investing arm is going all in on fintech.

On Tuesday, Point72 Ventures will announce it led a $3 million investment in a startup called Extend, which has built mobile technology business owners can use to share their corporate credit cards with employees and freelancers without handing over the actual cards.

This comes just days after Point72 closed an investment in a company run by one of Cohen's former traders, Imperative Execution, which is developing a dark pool trading platform. And Point72 recently was in an $8 million investment in a New York startup called Say, which is building technology to help shareholders participate in proxy voting.

Earlier this month, the venture capital arm was a co-lead in a $29.4 million round for a New Jersey startup, DriveWealth, that has developed a mobile site for investing in exchange traded funds and stocks, and it led an $18.5 million investment in Silicon Valley-based DeepScale, which is developing autonomous driving technology.

Point72 Ventures started two years ago to look for opportunities in the world of financial startups, managing director Matthew Granade told CNBC. It invests mostly Cohen's money plus that of a few Point 72 executives. The average deal size is about $7 million, and it has about 25 investments already with another three to four in the works, he said.

Those opportunities, Granade said, are in startups that are "fixing problems that others haven't been able to solve." That includes fintech as well as artificial intelligence and machine learning. One of its earliest investments was in a startup called Quantopian, which encourages people to write their own trading algorithms and licence them.

Steven Cohen's firm sued for workplace sexism
Steven Cohen's firm sued for workplace sexism

The whirlwind of deal activity comes as Cohen's hedge fund, Point72, gets back off the ground. The company's website says it has $11 billion under management and 1,150 employees.

Point72 was created four years ago as Cohen's family investment office. He returned outside capital when he shut down his former hedge fund, SAC Capital, after settling with regulators over failing to supervise traders. Regulators banned him from managing outside money until earlier this year.

Extend is aimed at small and mid-sized businesses, especially those that rely on outside freelancers who need to spend company money but don't have their own corporate spending cards. Business owners can avoid the awkward situation of giving their cards out only to risk spending abuses or identity theft, and workers can avoid having to use their personal credit cards and the hassle of being reimbursed.

The startup is run by former American Express executives who were trying to flip the digital payments process on its head. Instead of an app, like Venmo or Zelle, that people use to move money to each other, Extend moves around access to money.

Andrew Jamison, the CEO and co-founder, says they hope to line up several banks to participate. Silicon Valley Bank is the first. In addition to Point72 Ventures, other investors were Plug and Play, Reciprocal Ventures, WorldQuant Ventures and others.

"We give people the freedom to safely share what's theirs, starting with their credit card" said Jamison said. He told CNBC big potential markets are the construction and entertainment industries, which rely heavily on freelancers and contractors.

Correction: An earlier version of this story gave the wrong first name for Matthew Granade.