Arvind Purushotham, Managing Director & Co-head of Venture Investing at Citi Ventures, backs “post-product” that have have transcended viable beta with clear customer validation. Operating in 150 countries and just starting to branch out investments outside of the US and UK, Arvind revealed the strategy big finance is taking to invest in growing technology startups at Startup Grind 2016.
Following their first investment into an Israeli company, Citi followed the initiative with a FinTech accelerator in Tel Aviv - the first at the time, in 2013. They have additional innovation labs in Ireland and Singapore, along with an office in Palo Alto. Want to get together with Citi? Here's what they're looking for:
Citi's Five Investment Sectors
1. Commerce & Payments
2. Security & Enterprise IT
3. Big Data & Analytics
4. Financial Technology
5. Marketing Tech & UX
Arvind highlighted Betterment, a FinTech platform that “replaces financial advisors and can help you make better decisions.” Since Citi’s investment, Betterment has grown from about $100M to over $3B in management.
Betterment is an example of how Citi “helps our portfolio companies grow, as we can plug them into our existing infrastructure.”
The Why and How of Citi's Approach
Given the established yet still profitable “Legacy” ways of doing business, Citi has an eye on how the FinTech field is being disrupted - along with the innovations that would be profitable to integrate given sufficient customer validation.
Arvind commented on the consumer payments sector, drawing attention to how people are changing their purchasing patterns from “a swipe in a store” to smoother and more secure methods like by phone or with digital prepayment. In addition to improving financial performance, Arvind also “Wants to build the track record of companies we share commercial views with.”
An Institutional Partnership
Citi’s internal goals are primarily strategic and financial. Arvind believes both goals overlap as they are deeply intertwined. Aside from a financial ROI from the startup’s success, CV considers cost savings, ways of capturing new customer demographics, advances in security that cover a vulnerability, and features that can help any of Citi’s core operations. Some investments thus appear to be technology-sharing partnerships.
Nearly 40% of CV’s portfolio are commercial services, and there's a lot of them: new investments in the last 4 years exceed $50M. Arvind indicated Citi helps startups source and close large deals, strengthen and expand their hold on target demographics, and learn from CV’s vast experience.
When asked for more specific ways CV can help startups, Arvind commented on Citi’s deep familiarity with the regulatory market, and an ability to help companies work through legal obstacles should they arise.
Arvind co-heads the Venture Investing group at Citi Ventures., He invests in companies in Financial Services, Security, and Enterprise Infrastructure. In addition, Arvind helps lead partnerships between portfolio companies and Citi’s business units. Additional companies in Citi’s portfolio include Ayasdi, Jet, Optimizely, Square, Pindrop Security, and LiveNinja.