Citi Ventures innovation checklist: invest in startups, pilot new technologies, test new solutions

Could you describe the concept of Citi Ventures, its business model, objectives, and focus?

Citi Ventures is the innovation engine of Citi, and we’re committed to conceiving, launching, and scaling new initiatives with the potential to transform the future of financial services. Citi Ventures is designed to help Citi seek out new opportunities to invest in startups, pilot new technologies, and test new solutions that provide value to Citi and our clients. We have a team of experts committed to charting the unknown and discovering innovative solutions through external collaboration and internal entrepreneurship.

As strategic investors, we champion entrepreneurs and collaborate with our portfolio companies to actively inform startups’ product roadmaps to help them scale their businesses and accelerate the adoption of new technologies and business models within Citi. Through our meetings with nearly 1,400 startups a year, we develop a great understanding of emerging technologies, innovations and industry trends taking shape to crystallize our investment themes and identify distinctive startups to watch, invest, and commercialize through proof of concepts, pilots, and contracts signed with Citi and/or Citi’s clients.

Through our D10XSM program, Citi employees - who are often on the front lines with our clients to examine their pain points and needs - are provided with the opportunity to generate and test new ideas and build their own startups. D10XSM is our internal growth model that encourages innovation from within to help us build better products and solutions to meet and exceed our customers’ rapidly evolving needs.

Beyond our internal entrepreneurship program, we also form external partnerships to move the needle for Citi. We work to help inspire and build tomorrow’s leaders through the Citi® University Partnerships in Innovation & Discovery (CUPID) program, where we partner with universities to help foster innovation and game-changing ideas from future entrepreneurs.

What are your collaborations focused on and what are some of the success stories resulting from these collaborations? What companies are already there, what`s in their scope, and how can Citi’s customers benefit from innovation/collaborations initiated by Citi Ventures?

Collaboration is a huge aspect of our work at Citi Ventures - to stay competitive, we need to be constantly testing new ideas and co-creating with some of the brightest minds in the industry to continue evolving.

We invest in 10-12 startups per year, where we see value in the technology they’re developing and seek to provide them with expertise and access to relationships that exist through our vast Citi network. Citi has entered into commercial arrangements with the majority of the startups in the Citi Ventures portfolio. We autonomously invest in distinctive startups, nurture, and coach them on what it takes to sell to large enterprises and help them navigate organisations.

Three examples of successful commercializations with Citi Ventures portfolio companies include Docusign, Pindrop, and C2FO.

We invested in DocuSign in 2014 and soon after initiated discussions with Citi’s Consumer Operations team. Since our commercialization agreement, DocuSign, which went public last week, has helped create a better way of doing business for Citi and our clients by improving the agreement process and reducing paper usage among our customers around the world.

We invested in Pindrop in 2013 and built a formal engagement model in partnership with the Global Information Security group. Through our investment, we were able to accelerate the adoption of a new technology that has the ability to safely and securely reduce fraud losses through phone authentication.

In 2015, we invested in C2FO, which delivers the leading Dynamic Discounting solution to enable buyers to generate higher returns on excess cash and suppliers to save on financing charges. Citi Treasury and Trade Solutions, jointly with C2FO, has enrolled over 12 of our corporate customers who have used the solution to generate early payment discounts on invoices worth hundreds of millions of dollars.

What are Citi Ventures`s main development plans for 2018 in terms of projects and areas of exploration for future investments?

At Citi Ventures, we make strategic investments under five focus areas: Financial Services & Technology, Commerce & Payments, Marketing & Customer Experience, Data Analytics & Machine Learning, and Security & Enterprise IT.

For 2018 and beyond we will continue to invest across all of our focus areas and we plan to slightly increase the pace of our investment activity outside the US, with emphasis on Israel and UK/Europe. In fact, we are currently looking to add a junior venture investor in Israel and may be looking to hire one in London.

In which of the areas of finance will blockchain technology make the most inroads over the next 5 years?

The best applications to benefit from blockchain are those where interactions need to be programmable and immutable.

Programmable means being able to bundle settlement and reconciliation along with the transaction into a single atomic transaction, and immutable focuses on use cases where ownership, storage or transfer of value are essential aspects to the interaction.

Within financial services, financial markets are the area that has experienced the highest pace of blockchain experimentation, oftentimes through collaborations among startups, banks, and financial market infrastructure providers. However, it may take some time until projects are in production, as blockchain technology is still in an early stage.

In fact, there are important open questions as to which model(s) will prevail, including which protocols to be used, whether the proof of work will be based on public or private networks, and - if public networks are used - whether and how they will be able to scale, and whether they will be acceptable to industry participants including regulators.

What are the new trends and technologies that banks are looking into for 2018 and beyond? What other innovations should banks look at?

We are truly at the dawn of a golden age of big data, Internet of Things, and artificial intelligence. These technologies are particularly well suited for banks, which use data to segment and serve clients, to underwrite credit, to detect fraud, to monitor compliance, and to manage risk. One of our themes is to explore the opportunity for these technologies to deliver efficiency and insights to our clients’ treasury organisations – a theme we call Smart Treasury. We recently announced a couple of related investments in this theme – HighRadius and Contguard.

HighRadius is an integrated accounts receivable platform that can help Treasury drive automation and business insights across the credit to cash cycle. For example, HighRadius streamlines and automates the process of reconciling remittances collected against outstanding invoices. Additionally, it delivers insights, such as triggers to increase the credit lines of hyper-growth customers to avoid losing sales or triggers to initiate collections efforts when certain customers start delaying payments relative to their usual practices.

Contguard is an IoT-enabled supply-chain shipment monitoring and business-intelligence platform. It enables treasury and logistics organisations to gain transparency and insights on inventory in transit to unlock in-transit inventory finance opportunities. Additionally, it delivers insights like alerts that the container is staying at a warehouse longer than it was supposed to, which can enable remediation to avoid in-transit delays, or alerts when the container was tampered with, which can help assign responsibility if it suffered losses.

Bigtechs —such as Amazon, eBay, Alibaba, and Tencent— are often referred to as the biggest challenges for banks. What is your take on this? Do you see potential collaboration between banks and bigtechs?

We certainly expect tech giants to move deeper into financial services, especially in payments and lending where they are already playing. I believe, however, it is unlikely that they will tackle the core banking services unless they intend to be regulated as banks and to trade at different multiples, such as what happened with GE before it decided to divest most of their financial services businesses. We absolutely see opportunities for collaboration, and, in fact, several of the tech giants are clients of Citi.

About Luis Valdich

Luis is Managing Director, Venture Investing at Citi Ventures. He joined Citi Ventures in November 2015 to lead its venture investing activities in New York also covering Europe and Israel. Luis collaborates closely with Citi businesses enterprise-wide and with the financial technology startup ecosystem to identify and invest in attractive companies that can be strategic to Citi and where Citi can add value. From 2008 to 2015, Luis founded and ran JPMorgan Chase’s Strategic Investments group (with offices in New York, London and Hong Kong), where he was part of the investment committee, made over 40 investments, and participated on several boards. Previously Luis was a consultant at McKinsey and a principal at Softbank where he made venture investments in the US and Latin America.

About Citi Ventures

Citi Ventures ignites change and reimagines solutions that drive economic progress for clients. Headquartered in Silicon Valley with offices in San Francisco, New York, London and Tel Aviv, Citi Ventures accelerates the discovery of new sources of value by exploring, incubating and investing in new ideas, in partnership with Citi colleagues, our clients, and the innovation ecosystem. The team focuses on five key areas: Financial Services & Technology, Commerce & Payments, Data Analytics & Machine Intelligence, Security & Enterprise IT, and Marketing & Customer Experience. Citi Ventures accelerates its portfolio companies’ ability to scale through collaboration with Citi’s global businesses and industry experts.