At the Global Corporate Venturing & Innovation Summit in January, Scott Joachim, chairman of private equity group at Fenwick & West, welcomed Vanessa Colella, the recently-promoted chief innovation officer at financial services firm Citi who is also head of Citi Ventures.
Fintech, Colella noted, was a particularly exciting space for her sector – until a few years it did not exist because entrepreneurs on the US west coast did not understand the financial services industry and did not realise it was ripe for disruption. Bankers, she observed, are traditionally based on the east coast, far from Silicon Valley.
But fintech is not the only area of interest to Colella, who also pointed to sectors such as healthcare as offering opportunities. “We do not invest in entrepreneurs who we think can help Citi,” Colella said. “We invest in entrepreneurs who Citi can help.”
She has been active in finding these entrepreneurs. Since January, Citi Ventures has co-led personal finance management app Clarity Money’s $11m series B round, cryptographic software developer Dyadic’s $12m B round, Tealium’s series E round, among others.
Colella, ranked third as a GCV Rising Star 2016, was Citi Ventures’ global head of venture investing and strategic growth initiatives from 2013.
A Massachusetts Institute of Technology and Columbia University graduate, she wore a number of hats before coming to Citi. She said for her Rising Star profile: “Over the course of my career, I have been a partner at McKinsey, entrepreneur-in-residence at US Venture Partners, senior vice-president of insights at Yahoo, a seventh and eighth grade science teacher and author of a book on agent-based modelling.
“In hindsight, not having a typical corporate venture capital background has been an advantage in leading the teams I do now. I have always said that one of the major perks of my job is its panoramic scope and breadth – which means keeping an eye on the big picture while having my finger on the pulse of hot trends and driving new ideas forward.”
This pioneering combination of chief innovation officer and head of ventures, first introduced by Colella’s predecessor, Deborah Hopkins, in the late 2000s, has become a model for peers across industry sectors and beyond the US.
Colella said CVC was a fascinating place to be because its maturity came at a time of change for the broader venturing industry, as crowdfunding and angel funding made more of a mark. She said: “Traditional VCs are now devoting energy to bringing operational expertise to their firms. In CVC, we have the advantage that this expertise is already resident in-house and ready to go to work to help our portfolio companies.”
This is pushing CVC into the spotlight. Colella said that with CVC “you have a pre-established set of assets, people and experience that can help our portfolio companies scale effectively and efficiently”.
She said the rules of the game were changing. Historically, corporates may not have partnered small firms. Now, however, large companies need to explore new and different partnerships. She said: “Add to this the disruption and dynamism of today’s financial services landscape and you will find a very different playingfield now – and that includes firms such as Citi partnering entrepreneurs who are looking to change the game in financial services.
“The greatest success that we have had at Citi Ventures is our ability to figure out a method for working with our business leaders and entrepreneurs to bring together two very different kinds of minds and two very different forms of problem-solving, all with the objective of better serving our customers. Having commercialised the majority of our portfolio, we have deep experience guiding our startups in how to engage and interact inside a multinational enterprise – something they might otherwise have been hard-pressed to navigate – and pinpointing for them the areas in which they can potentially add value.
“We have a proven track record of success, not just in fintech. We have done a lot of work with startups in very different sectors that touch totally different constituents within Citi, such as data and analytics with iAyasdi, Datameer and Platfora, security with Silver Tail and Pindrop, commerce and payments with Square and Jet.com, fintech with Betterment and marketing with Optimizely. We are very proud of our ability to work across these sectors and successfully help our companies work with Citi to advance their businesses – and help us advance our customer offerings.”
Colella said one big question for Citi was how to bring the innovation and opportunities in from outside the firm and inculcate those into a 203-year-old bank. She said this involved “figuring out how you work with the various existing businesses within Citi with full knowledge and full empathy about what they are trying to accomplish in the next five to 10 years, while getting them just as excited and passionate as you are about the change you are introducing.
“As a corporate venture capitalist, it is important to articulate what we are trying to do to help startups so that they can quickly and effectively identify whether or not Citi is a good match to fund them or whether someone else might be a better match. Of course, we look at an investment from an equity point of view, and we also consider how we can help make a startup successful in the long run. Accomplishing this involves having an open dialogue with every entrepreneur and being transparent about the support we can offer.”
