Give us a brief introduction to American Express Ventures.
The American Express Ventures team was formulated in 2011 to accelerate American Express’s digital transformation through investments and strategic partnerships with startups. We look to invest in early to mid-stage startups that work in the areas of digital commerce, what we call core capabilities such as data analytics, fraud protection, and servicing, as well as, more recently, startups working on improving financial inclusion in the US.
What key technology and new business models do you see as an opportunity or threat to current financial services businesses?
I see technology as an opportunity to innovate in our business. There are two key areas I would like to touch on.
First, the evolution of platforms, mobile, social, and so on. By one standard, you see a handful of major platforms emerging – Apple, Amazon, Google and Facebook – and we are actively partnering and embedded in each. We view American Express as a platform here as well. In fact, we have the largest integrated global payments platform. We bring together buyers and sellers in the form of card members and merchants through our closed-loop system. Just to give you some numbers, we process 6 billion transactions a year between our 100 million-plus card members and the millions of merchants on our platform.
Another key area is big data, machine learning and analytics. Data allows us to gain insights on our card members and merchants in real time and allows us to provide them with value-added services based on their preferences. What excites us is finding opportunities to invest in and facilitate partnerships with innovative companies that we can work with to build and deliver new services and products on top of our platform.
Bitcoin and Block chain models are achieving a lot of coverage and interest. How is this seen from established financial services and have you invested in organisations in this sector that you can talk about?
We have not made any investments in these areas. American Express is certainly following the space with keen interest, both from a technology as well as a regulatory perspective. We are constantly seeking more efficient ways of leveraging technology to increase our efficiency. I think there could be benefits reaped from the technology and the platforms and protocols of crypto-currency systems. It is still early days and venture investing is an appropriate tool for us to learn about the space.
What type of venturing process do you use?
In 2011 when the Amex Ventures team was formed, we announced a $100m digital commerce Initiative, which allocated funds specifically intended for venture investments. We now have an annual allocation that we work from.
Give us some order of magnitude to the investment and portfolio size.
We make minority investments, less than 10% ownership stake, and have made investments in over 20 companies.
Introduce the members of the team.
First of all I would like to introduce Rohit Bodas, who is a partner in American Express Ventures. Rohit joined American Express in 2011 to help launch the company’s corporate venture initiative. Prior to American Express, Rohit was a founding member of Hartford Ventures and made investments in Driver Side and Coulomb Technologies. Prior to Hartford Ventures, Rohit held various positions at Motorola in R&D, business development and at Motorola Ventures. Rohit has developed key mobile video and security technologies and holds three US patents.
Daniel Shi is a senior associate. He joined American Express in 2014 as a member of the company’s corporate venture initiative. Previously, Daniel was part of the corporate development team at Tencent, focusing on consumer internet strategic investments and M&A. Prior to that, he was with Nokia Growth Partners, a mobile-focused venture fund backed by Nokia. He began his career doing enterprise sales for software services companies operating in both the US and China.
Ryan McCargar is an associate and joined American Express in 2014 as a member of the company’s corporate venture initiative. Previously, he was an analyst in the technology investment banking group at GCA Savvian, focusing on M&A and private capital transactions. He began his career as an audit associate in KPMG’s venture capital and alternative investments group.
The team is growing, both in the US and internationally. We also leverage the corporate development team as well as experts within the organisation, both in New York city and internally.
What type of partners do you work with?
We are well plugged into the startup and venture capital (VC) ecosystem. We spend most of our time with startups, VCs and entrepreneurs. You have to have longevity and you have to bring additive value to the portfolio companies, which is what we always look to achieve, and is a key tenet for us.
How do you measure your financial and strategic performance?
First we look at the strategic value. One way in which we measure that is through the engagement that our teams drive between our business units and portfolio. Today, I am happy to report over two-thirds of our portfolio have significant relationships with American Express.
The other measure of course is financial return, both through business partnerships as well as investment returns. It is still early in our investing cycle, but we are on track on this metric as well.
Illustrate what you have described with a couple of examples of recent investments or collaborations.
LearnVest is a social financial management platform that is based in New York city and is providing new ways to bring financial advice to the masses. Since investing in them, we have integrated their financial education content into our Serve platform, bringing free financial education content to Serve and Bluebird customers.
Intacct is a leading cloud financial management and enterprise resource planning software that is used by mid-market businesses to manage accounting and financials. We invested in Intacct last year, and established a partnership with our global corporate payments team to integrate commercial payments and working capital solutions into Intacct through our first joint product, the Intacct Check Delivery Service.
This allows thousands of mid-sized businesses to send cheque payments to suppliers and have their general ledger automatically updated, all with the click of a button. Additional card and non-card payment solutions from American Express and Intacct will be coming soon
What do you do to relax?
I spend time with my family and work on my golf game. The good news is that my sons have now picked up the game, so I can do both at the same time.
Harshul Sanghi will be a speaker at the GCV Academy in Silicon Valley in October. For full details visit: gcvacademy.com.
You can listen to this and other interviews on a podcast available at gaulesqt.podomatic.com
Andrew Gaule leads the GCV Academy, developing the capabilities and expertise of organisations leading open innovation, venturing and corporate venturing programmes to drive strategic benefit. He also supports innovation programmes and collaborations in new value chains in global organisations.
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