Mariano Belinky nailed the difference between corporate venture capital investing and regular VCs at a conference this week.
Belinky, the boss of Santander’s $US100 million (£64.8 million) fintech investment arm InnoVentures, was asked about how his fund goes about investing at LendIt Europe conference in London on Tuesday.
He said one of the last thing he and his colleagues think about is financials.
Belinky said: “We don’t really set clear exit paths. The financial component of our objectives is minor. We don’t want to lose money but at the same time we aren’t saying the right thing to do 18 months out is to have an IPO. It’s more this serves a very concrete gap or opportunity in the way we serve clients and hopefully you won’t go bust. Well, more than hopefully.”
The key, he said, was that all the investments had to be “strategic.”
“We look at things where we can add value to our clients and learn,” Belinky said. “There are large segments and subsegments of customers that we’re not serving because we don’t know how to or they’re already bumping up against our sector limits.”
“Our threshold is that there is now, or will be in a short time, a product we can take to clients. We don’t look at revenue, we don’t care if it’s pre- or post-revenue. That puts us usually late A stage [Series A round, the first injection of institutional funding]. We won’t do purely financial it has to be capital plus something else we can add.”
That’s the big difference between corporate venture capital and regular VC investing. More often than not, the investor’s business matters as much as the investee’s.
These funds are often meant to nurture companies that can help Santander, Salesforce, TravelEx, or whichever corporate is doing the investment.
Santander InnoVentures has made 5 investments since opening up last year, most recently backing blockchain startup Ripple and online small business lender Kabbage. Belinky said Kabbage was a prime example of a business serving customers that Santander didn’t have the expertise to address.