It’s been really exciting to work with Vanessa Colella, Managing Director and Head of Global Venturing at Citi Ventures, which is sponsoring this year’s MIT Venture Capital & Innovation Conference. With three degrees from MIT, including a PhD from the MIT Media Lab, Vanessa makes us MIT ladies proud! In preparation for the conference on Dec. 12th, I had the privilege of speaking with Vanessa about a number of topics, including Citi’s perspective on the evolution of financial services, the rapidly changing environment in venture funding, and Vanessa’s experiences in the male-dominated world of Venture Capital and Financial Services.
Citi Ventures has been actively investing in Commerce and Payments companies like Square and financial advisory firms like Betterment. What is the motivating factor in investing in these types of companies? Do these investments speak more broadly to Citi’s perspective on the evolution of the financial services sector?
Vanessa: Citi is an institution that has been around for more than 200 years, so that has a huge impact on our investment philosophy. First, our venture investing philosophy is that financial and strategic returns go hand in hand. We invest in entrepreneurs and companies with the possibility to generate a financial return and where we can provide that startup with resources, insights or access to help make them successful. In my view, great entrepreneurs can get funded from many places – there is ample capital available for good ideas. We only want companies to partner with us if they think Citi can help them grow and scale their business in a meaningful way.
The pace of change in the world today, especially in the financial services sector, is extraordinarily rapid, and we see that change as an opportunity to drive better experiences for Citi’s customers and clients. Change and innovation happen in a lot of different places – both internal and external to Citi. My group functions as a bridge that identifies and brings outside entrepreneurs, technologies and startups into Citi. Often, smaller companies have great ideas and want to disrupt and change the financial services environment in a positive way – but they often don’t have the capital, scale, or capability to achieve their vision. Our goal as a venture group is to enable maximum impact to benefit both the sector and Citi’s clients and customers.
When thinking about investing, how does Citi Ventures’ due diligence and investment activity fit more broadly into Citi’s strategy and internal product development? Do trends from the startup community influence development of new services on the commercial banking side?
Vanessa: In today’s world, it’s amazing – we find innovation in so many different places. We really view our venture investing activity as a way to help grow and build ideas and technologies that will also help our customers. Our investment team knows how hard it is to build and scale a business. Our investment often serves as that extra push to help take a great business or idea to the next level. Citi Ventures is focused on enabling technologies to support our core business, which provides a wide range of financial products and services to our clients around the world. One great example is in security. Security might not sound very sexy, but it’s absolutely critical to everything we do as a financial institution. As a result, we are constantly on the lookout for people who have figured out ingenious ways to make the financial sector a safer, sounder place.
Talk to me about how your investment strategy differs from traditional VC. We’re all familiar with the early stage VC model, but how does a firm like Citi think about later stage investing?
Vanessa: We work very collaboratively with a lot of traditional VC firms. What we see as our value-add and point of differentiation is that we work with the entrepreneur to bring perspective and expertise from a large enterprise POV to their business. We have a team that interfaces with our portfolio companies to help them find the right customers and navigate the commercialization process. While a traditional VC might be able to make introductions, we offer a deep set of connections across Citi and our industry. For many of our portfolio companies, we invest at a stage when they’re looking to close their first or second deal with a global enterprise – and we can often be an avenue to help these new companies close deals and scale.
It’s also very important to note what we are not. One thing that we don’t do is look for any kind of exclusivity with our portfolio companies. In our investment activity, it is always our goal to make our portfolio companies successful, with whomever and in whatever way is necessary. We aren’t trying to buy ideas or lock up companies for our own advantage – we are trying to help companies and great ideas scale and grow as quickly and effectively as possible.
As you know, one of our big challenges from a conference organizer perspective this year was presenting a more gender-balanced view from the investment community and the entrepreneurial community. It’s been a major news topic, and we recognize many of the challenges around gender in both startups and venture capital. Has it played a role in your career, or in your perspective as an investor?
You’re right – the gender balance issue has been highlighted this year, but it’s been a persistent challenge throughout my career. What you’re doing with the conference, actively addressing the issue, is what really can make a difference. Simply acknowledging gender and diversity issues is not enough without actively working to make changes. In my group, we think of this in a few different ways:
- Understanding the End Impact: Many studies show that more diverse environments lead to better outcomes, financial and otherwise. I have a long-standing personal commitment to how we think about growing diversity from many different angles, not just gender. Our entire leadership team at Citi Ventures happens to be women, and we appreciate the opportunity to stand out from the norm. Of course, we also recognize that we need to encourage diversity of opinion on our end as well. It excites me that the dialogue includes a focus on fairness and on delivering business results. Diversity results in better outcomes. Period.
- Building a Broader Funnel: It’s not always easy to find minority or female founders or investors. It’s my view that we need to think differently about the problem, and really frame it around broadening the top of the funnel where we channel talent and resources into developing people, rather than a problem at the end of the funnel when selecting and placing talent into roles. I love serving as a mentor and I always tell my mentees, go and do what you don’t yet know how to do. Be willing to go out of your comfort zone, to learn and ask questions, and to take risks and accept failure as a positive outcome. We have to train students to think this way early on by giving them the opportunity to learn, discover, and be creatively confident so they can go out in the world and take risk.
- Creating Opportunities: I absolutely recognize that I’ve been lucky to have had such a wide variety of opportunities throughout my career. We need to expand that opportunity to a wider array of people. I would encourage both prospective employees and employers to take a risk, and to try something different to create new opportunities not only for themselves but also for others. The great thing about the startup community is that your failure can actually make you better – you can learn from it and then keep trying and experimenting. That’s not failure because each iteration teaches you something critically important.
Thanks so much for your time and insight Vanessa. We’re really looking forward to seeing you on December 12th and hearing your thoughts about innovation in the financial services sector – this is an area we’re very passionate about and where we see tremendous disruptive potential!
- Written by Meltem Demirors, Conference Managing Director and MIT Sloan Class of 2015