Victoria Cheng at Citi Ventures invests in startups that are looking to change the future of financial technology or support a better ecosystem for financial services. Doing so requires an active participation of some of the best incubators and accelerators in the US, including selection and mentoring of early-stage startups running through Citi Ventures’ Global FinTech Accelerator with Plug and Play, being a mentor of Startupbootcamp’s three-month fintech-focused bootcamp and as an adviser to the Accessible Financial Services Incubator.
Cheng said: “We invest in startups that create technologies Citi can leverage to better serve our clients in areas such as enterprise IT – security, big data, machine learning, marketing technologies, developer tools – and consumer financial products and services – all of fintech and commerce, including lending, banking, payments, wealth management, insurance, trade, treasury, accounting, financial planning. It is great to see that fintech has gained so much momentum since I first started investing in it in 2012!
“My job is to source, exercise due diligence, and invest in the most innovative new companies in financial services. Post investment, I work to accelerate and scale their growth through partnership with the larger Citi organisation.
“At the same time, I advise business leaders on new themes, trends, and strategy. It is a role that requires many hats. We, at Citi Ventures, are helping Citi become more collaborative with the external startup community, so our clients get better experiences, products, and services.”
The results of such efforts by Cheng and the team under Vanessa Colella have been impressive. Citi’s ventures portfolio includes Jet.com, DataRobot, Homelight, Plaid, Bluevine, Appboy, C2FO, Chain, LiveNinja, FastPay, Optimizely, Persado, Feedzai, Docusign, Square, Ayasdi, Betterment, TradeIt, Chef, Datameer, MDaq, Tanium, Platfora, Pepperdata, Pindrop, VArmour, Cylance, Joist, Clarity Money and Tealium.
Of these deals, Cheng said: “I am an investor in companies like Plaid [which added Citi and peer America Express Ventures to its $44m B round in February last year] and DataRobot [$54m C round in March], which are at the forefront of massive transformations in financial services.
“One is providing data access and integration infrastructure for interoperability with other products, and the other [DataRobot] is creating the tools to allow machine learning to be democratised across entire organisations and industries.
“I believe machine learning and artificial intelligence will become a competitive advantage unlike any we have seen before.
“It is reflected in the scale, success, and staying power of Google, Amazon, Netflix, and Facebook. It will affect other industries outside of technology as well, including financial services. When it is done right, it is one of the few technologies that gets better and becomes more valuable over time.
“That’s why we have invested in other companies like Feedzai [$50m C round], which uses machine learning to prevent fraud in omni-channel commerce, and continue to look for opportunities in that space.
“In terms of commercial success, we use Braze and Docusign in our consumer business to better engage with our clients, and we work on commercial relationships with companies like Bluevine, FastPay, and C2FO in distribution and financing. I have also been fortunate to see Jet get acquired by Walmart for $3bn during my time at Citi Ventures.
“Citi Ventures more broadly has established D10X, an internal strategic growth model that enables employees to take new business ideas from concept to launch. These employees are coached through a rigorous validation process led by Citi Ventures and supported by Citi’s global innovation labs.
“We began this program two years ago, and it has grown tremendously since then. It is an avenue for co-creation with our startups. We launched a blockchain product in partnership with Chain, a Citi Ventures investment, and Nasdaq through this program for a private company stock exchange.”
However, the work brings challenges: “From an investing perspective, it is hard to balance the risk aversion of our larger corporate entity with the necessity of taking risks in venture capital.
“From a partnership perspective, setting expectations up front is always important so that the relationship can be successful. Our organisation moves at a different speed than a startup, but that’s why our team is here to identify great opportunities to invest and partner.”
And, as well as “endeavoring to build one of the best venture capital funds in the world”, Cheng added: “It is important that my work has a positive impact. One of the priorities for me in the New Year is to support female and underrepresented entrepreneurs. I, myself, plan to dedicate each Friday to meeting with female entrepreneurs and helping connect them with individuals that can help grow their business. I encourage other VCs to institute that practice, so we are increasing the network these entrepreneurs have access to.”
Cheng, who was part of the 2013 Kauffman Fellows Program, has taken on its mantra of giving back and is a cofounder of the Women in Venture network, an organiser of the Columbia Venture Community, after her MBA at the university’s business school, a board member of Insite in New York and mentor of Runway.
Before her career in venture capital, Cheng graduated from Georgetown University and then worked as an investment banker focused on power and utilities, with a particular interest in alternative sources of energy (nuclear, solar, wind, geothermal) and electricity distribution.
She added: “I was also a private equity investor. I eventually found my way to startups and had the chance to work with some amazing entrepreneurs in graduate school at Columbia University, as well as at Brainscape, Olapic, and NimbleTV.”
Having made her way through various internship, analyst and associate programs herself, before two years at Core Innovation Capital and then finding her longest stint at Citi.
Cheng said: “I wanted to go to a place that had the potential for extraordinary scale and where I could have an outsized impact on both my portfolio of companies as well as the world.
“I was attracted to the scale of Citi, in geography (more than 100 countries), in industries (consumer finance and institutional financial services), in technology spend ($8bn per year), and in sheer numbers (more than 200 million customers and 75,000 institutional clients).
“Our value-add goes well beyond capital. We bring 200-plus years of financial services experience, the ability to help enterprise companies expand into financial services as a vertical, entrance into a new country, distribution or co-marketing of complimentary products, co-creation with our startups on new solutions, and endless other possibilities that we explore alongside Citi’s business unit partners.
“At the same time, I was intrigued by the flexibility that came with not being a traditional fund. We can invest across stages from series A to series E, time horizons, check sizes, and lead/follow.
“The job of a corporate venture capitalist is much more nuanced and complex than a traditional VC firm. We must balance the interests and influence of multiple groups at once, both internally and externally. When innovation and growth is a priority for leadership, changes are made across the organisation, such as decision-making processes, speed of onboarding, openness to working with partners, technology investments for the future, cultural acceptance of creativity and failure, product development that embraces lean and agile, creation of application programming interfaces, and so on.
“These changes are critical to be able to build partnerships with fast-moving, tech-forward startups. CVCs also need to work well with the entrepreneurial ecosystem. What attracted me to Citi Ventures was that our team consisted of all investors who have worked as traditional VCs in Silicon Valley.”
But outside the industry, Cheng said: “When I am not working, you can find me rock climbing in the mountains near the San Francisco Bay area, travelling to taste all the interesting different types of food around the world, and taking photos of the cool new tech innovations abroad.”