As a company processing 1800 financial payments per second, it is perhaps no surprise that First Data is getting very interested in what is going on in Silicon Valley, given there is huge amounts of innovation in the sector.
The company is focused on what fast-growing venture capital investment in the sector means, with 85 corporate venturing investments in financial services in deals worth $1.8bn tracked by Global Corporate Venturing this year, as well as two exits and one initial public offering worth $1.6bn. Pete Donat, head of First Data Ventures, the new corporate venturing unit, said: “There is an immense amount of innovation directly and adjacent to payments which is seeing a large amount of venture capital coming into this space and investors are putting money into very disruptive players.”
This led the company to open an office in Silicon Valley and has seen it make a number of acquisitions. Donat added: “We opened our Silicon Valley office two years ago and are in touch with that disruption looking to utilise First Data’s capabilities. In particular the ventures team initially met with both Clover Station and Gyft, two companies that we liked so much that our corporate development team decided to acquire them.”
The company is keen to provide significant resources to make Donat’s job easier. He said: “We have top of the house commitment to venture investing and we have commitment to do whatever it makes sense for First Data to do.”
In the last year First Data has done four venture capital deals, of which one has been disclosed.
The one disclosed deal by First Data Ventures was backing online marketing company LocalVox, which included a partnership with First Data. Donat said: “Before we did the LocalVox investment we had reached an agreement on a number of commercial terms. We knew what we were buying into as our team jointly investigated the solution to ensure we could create a great product. The released product came after our due diligence and we are executing against that product live with customers and getting good feedback.”
Donat said: “We bring a lot of capabilities for start-ups to use, such as securitiy solutions and access to the Clover App Marketplace. It is my team’s job to figure out which capabilities make sense for each company so there is a commercial and investment win-win.”
First Data is seeing a lot of interesting businesses. Donat added: “Our dealflow is exceptional and we are seeing so many exciting companies, but unfortunately are saying no to most. We are actively working on several opportunities and it is good to be busy.”
Donat has worked around payments and innovation for much of his career. “I have got a 20 year history in this industry, with strategy and product roles at Mastercard and Visa. I spent time deep in the Silicon Valley ecosystem at Plug and Play and have in many ways been working on some of the things that led up to the launch of First Data Ventures.”
The transformation of First Data’s presence in Silicon Valley has been swift. Donat said: “I started as a one man shop out here in Siicon Valley and now we are bursting at the seams, with staff additions and growing teams that support acquisitions.”
Donat added the business views Silicon Valley as the most attractive hunting ground given current innovation, but is also looking across the US. He said: “It is not the only fin-tech start-up location, but there continues to be significant activity out here, as plenty of our dealflow comes from other parts of the country. There is more innovation here than anywhere else, especially now in payments.”
Global Corporate Venturing is regularly profiling new entrants into corporate venturing to put a spotlight on what these new players are trying to do. In partnership with Andrew Gaule, we are also providing training services to these groups and established entrants through our GCV Academy. The next sessions are on January 20 and 21 in London and on February 5 and 6 in California.