Overseeing Citi Ventures global investment strategy, accelerator programme and internal strategic growth initiatives, Vanessa Colella has earned a number of high-level responsibilities in her two-and-a-half years as a managing director at US-listed bank Citi’s corporate venturing unit.
The Massachusetts Institute of Technology and Columbia University graduate has worn a number of hats before coming to Citi. She said: “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 an author of a book on agent-based modelling.
“In hindsight, not having a typical corporate venture capital (CVC) 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.”
Colella said CVC was a fascinating place to be because its maturity comes at a time of change for the broader venturing industry, as crowdfunding and angel funding make 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. A corporation’s pre-existing structure and network enhances its ability to venture above a traditional venture unit, Colella said. And added that with CVC “you have got a pre-established set of assets, people, and experience that can help our portfolio companies scale effectively and efficiently”.
Colella 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’ll find a very different playing field now than what it used to be – and that includes firms such as Citi partnering closely with 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, and it’s 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 of the firm and inculcate those into a 203-year-old bank. Colella said what goes hand in hand with this is “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. We have great relationships with our business colleagues – and we learn more each day about how to best navigate this terrain.
“The venture capital landscape can be daunting, and let’s face it – most people found their companies not to raise capital, but because they are passionate about a product or solution that they have created.
“Yet there isn’t a book or a manual that an entrepreneur can just turn to and expect to get all the answers about how to fund their venture. More often than not, what ends up happening is the entrepreneur spends a huge amount of time trying to figure out what the best plan of action is. It’s a bit like blindly sending out applications to any random college and hoping it will be a good match if you get accepted.
“As a corporate venture capitalist, I think it’s 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. I mentioned that CVCs have historically been perceived as comparatively less exciting capital options for entrepreneurs, but this reputation is dated. 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.”
Despite her wealth of knowledge on venturing, Colella said that one of her biggest lessons came from teaching earth science at a school in Brooklyn: “By a fluke of the education I received, I’d never formally taken earth science, but I thought it wouldn’t be too difficult to stay ahead of a middle-school textbook. In answer to my hubris, one day a kid raised his hand and asked me a question about a topic that we hadn’t yet gotten to. I answered his question with my best guess. It turned out I wasn’t right and in under a minute, I’d lost all of my credibility in front of the entire class. That day, I learned that it’s fine not to have all the answers. There’s a truth out there, and it might be one that somebody can teach you, or something nobody knows and you might be the one to discover it. By pretending to yourself and to others that you have all the answers, you’re shutting yourself off from those moments of discovery, which is one of the worst things you can do.”