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A fintech Investment bank? Is that even a thing?

We talked to banker and yogi JEFFREY SWEENEY, CEO of US Capital Partnersabout leveraging tech across sectors, embracing regulations, and running a bank where almost everyone’s a vegetarian…

NAME: Jeffrey Sweeney
OCCUPATION: Chairman and CEO of US
Capital Partners Inc.
BORN: Seattle, WA.
EDUCATION: University of California, Santa Barbara, BSc in Business Economics
CAREER: 1979 – 1994 | CEO, Machine Works Corporation
2008 – 2014 | Co-Managing Partner, Breakwater
Investment Management LLC
1997 – Present | Chairman and CEO of US Capital
Partners Inc.
FAVOURITE BOOKS: The Bhagavad Gita – I really love the ancient wisdom principles expounded in the book as well as the examples of the timelessness of the human experience. Also, the Aubrey-Maturin series by Patrick O’Brian. O’Brian’s charmingly flawed yet functional characters live fully and fiercely against the backdrop of the sea and sailing ships, which I love. It is a powerful series that I have enjoyed revisiting often over the years.
RESTAURANT: Shizen Vegan Sushi Bar in San Francisco – great atmosphere and amazing food!
HOBBIES: Sailing, yoga, and charitable activities in India providing education for underprivileged girls near Delhi and Kolkata and supporting San Francisco Food Bank.
BUSINESS PHILOSOPHY: I believe in taking an entrepreneurial approach to everything in life. Having an innovative mindset allows for better problem-solving and driving real market growth, which fintech is doing for the banking sector. It’s letting us take the best of traditional banking and repackage it in products and processes that allow greater access to financing by a wider pool of deserving candidates. So it’s an exciting time to be in finance.

So … who are you and why did you create US Capital Partners?
I was born in Seattle and moved to Southern California with my family as a child. My
father had a middle market aerospace manufacturing company. That business made
use of a lot of emerging manufacturing high technology back in the 70s and 80s, which
was revolutionising both our family business and that sector at the time.
We were on the cutting edge of manufacturing tech back then. Technology prices were
dropping, computing power increasing, and it was an exciting time see the implementation of new metal cutting and financial reporting technology applied to our business. I got to see first-hand how tech could transform an entire sector, and as a young man who started out there in my late teens, it was a formative experience that inspired me to keep my entrepreneurial edge when I eventually became CEO of the family business. I think it has formed my approach to business ever
since. Using tech to improve efficiency lets people do more at less cost. It let us get our
business to a place where I could sell it off at the height of its success, in the mid-90s.
I took a few years out after that to sail around the South Pacific and get more deeply
involved in practicing yoga, which included spending time in India to connect with the
South India Ashtanga yoga tradition. It was a great way to enjoy the windfall that came with selling the family business, but it also gave me the time to contemplate what the challenges were running a tech manufacturing company.
One thing about that sector is how capital intensive it is. I spent a lot of time being on the client side of the table looking for adequate financing, which was not so easily available then and is less so now when you’re on the low to middle market end of the spectrum.
Investment banks haven’t traditionally catered much to businesses in that category, and my time in manufacturing made me appreciate that and want to do something about it. So that’s really been the inspiration behind starting US Capital Partners. To serve small and lower middle market businesses by providing financing that’s typically available only to bigger players. So in 1998, I used some of our family office money from my sale of our business to buy US Capital, which was originally an equipment-leasing company that I have transformed into what it is today – a full-service, technologically innovative private investment bank.

Sounds like quite a jump. How did you manage that?
The short answer? Embracing new technology – fintech – and new approaches to financial regulation – regtech. Applying the best of the latest tech allowed us to take our aerospace manufacturing company to new heights. But we couldn’t have done that without also working closely with regulators – which, in aerospace, is an absolute must, because if you make a mistake in finance, people lose money, but in aerospace, they die. Success for us came from being early adopters of tech and being very savvy with sourcing financing, but also having a close relationship with regulators, which enforced quality.
That has been the driver for success for US Capital Partners as well. We strongly believe
in working with regulators and regtech to give structure to the process of implementing
new financial technology, which can be a bit chaotic in the early stages. Regulations put
safeguards in place that protect our investors and clients, so it’s essential.
The goal of US Capital, and my mission for the next few years, is to take technology,
adapt it early and be able to use it in our business to make it more efficient. We want
to serve more people at a lower cost while providing more revenue to share with our
stakeholders. The trick to doing that is to be a discerning early adopter of technology –
like in the old aerospace days – and to work closely with regulators to make sure that
what you’re building or implementing is efficient, innovative, and compliant. We’re
in the business of building better processes, not displacing people’s jobs or jeopardizing
their wealth. So regulation helps to keep tech innovation responsible and productive – in fintech and elsewhere.

So you’ve got tech and finance and regulations. What about core values?
Our core value is to do well by doing good. We like to use our capital to create profit while having a positive social impact. Of course, we’re not a charity, so our reason to exist is maximising shareholder value. We believe this can be done in a way that benefits everyone involved – including our local communities and economy. And we’re doing this by using technology to bring the sophistication of Wall Street financing to serve Main Street needs.
On a personal level, I maintain a lifestyle that’s based on generally socially responsible
principles. I’ve been vegetarian for 35 years, and 4 out 5 directors in our company are also vegetarian. We like to be on the right side of social and environmental progress, because it’s a sign of having intelligent humanity. If that means choosing between, say, a pork farm and a renewable energy company that both generate 10% profit, we’re going to choose the renewable energy firm. In today’s world, we are fortunate to have those choices now.

Speaking of progress, what do you think of ICOs? Real opportunity or false hope?
We are implementing ICO blockchain ledgers for our offerings going forward in 2018, because ICOs are very useful when done correctly. We firmly believe, along with the SEC, that they are securities. And the blockchain technology necessary to hold these ICO securities is a great way to hold assets in general, if there is transparency when necessary. For us, it’s going to be a big area, because we’re very active in private placements of debt and equity as well as venture secondary sales. An
ICO or blockchain ledger will let us facilitate smaller or larger private secondary offerings at a lesser transaction cost with more security and transparency. Using blockchain to record the ownership rights and subsequent transactions for shares allows for greater efficiency and security. It’s miles ahead of what we’ve got right now in the sector, which is an awkward series of checking and confirming things between multiple parties across multiple platforms and channels. Blockchain will remove that unnecessary back-and-forth, making it cheaper and more secure.
This is why we’re fintech, with a capital ‘F’ and a small ‘t’. We use tech as a tool to support and grow our core business of finance, and we’re not afraid to explore the possibilities that come with it. Because really, we’re entrepreneurs at heart, and our ability to deliver the best service as an investment bank comes from us being forward-thinking and dynamic in our approach.
As I like to say, we’re twenty years in to our hundred-year plan. We’re very much here to stay, and being a fintech firm is going to make that happen for us.

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