Name: Citi Ventures at FinovateFall 2023 - This year’s fintech funding trends
Uploaded: 2023-09-22T10:15:08.760Z
Duration: 499.96
Description: At the FinovateFall 2023 conference in New York, FinTech Futures caught up with Arvind Purushotham, Global Head of Citi Ventures, to discuss the current fintech funding landscape and which areas are seeing the most investment activity amid a tough macroeconomic climate.

FF.INT.004.mp4

FF.INT.004.vtt

ENGLISH

{{00:00:05}}
This is FinTech Futures at Finovate
Fall, and I'm joined by Citi Ventures.

{{00:00:10}}
Arvind, thank you so much for joining us.

{{00:00:12}}
Thank you.

{{00:00:12}}
Good to be here.

{{00:00:13}}
Excellent.

{{00:00:14}}


{{00:00:14}}
Thank you so much again for taking
the time out to speak with us.

{{00:00:16}}
Just to get started, would you like
to give us a quick introduction to

{{00:00:18}}
yourself and your role at Citi Ventures?

{{00:00:20}}
Absolutely.

{{00:00:20}}
I've been at Citi for
about 12 and a half years.

{{00:00:23}}
I run Citi Ventures it's Citi's strategic
investment group one off, I should say.

{{00:00:29}}
Prior to coming to Citi Ventures, I
was a partner at a venture capital firm

{{00:00:33}}
on Sandal Road called Menlo Ventures.

{{00:00:36}}
And I came to venture capital via the
tech world, I was a semiconductor designer

{{00:00:39}}
way back when I first got out of college.

{{00:00:42}}
Excellent.

{{00:00:43}}
I guess to start, it's been quite a tough
year for FinTech investment globally.

{{00:00:47}}
Given the shape of the global 2024?

{{00:00:54}}
When we think about the FinTech world,
Citibank has been investing in FinTech

{{00:00:58}}
for over 10 years, over 12 years.

{{00:01:00}}
And we have seen that first wave
of FinTech startups come in, be

{{00:01:05}}
successful, become publicly traded
companies, and so on and so forth.

{{00:01:09}}
And I think FinTech in 2022 took
a little bit of a reset, just like

{{00:01:13}}
the rest of the market, right?

{{00:01:14}}
And we saw that happening.

{{00:01:16}}
One of the things I've learned is
it's impossible to be completely

{{00:01:19}}
divorced from public market sentiment
in the private world, right?

{{00:01:23}}
And so just as the public markets
have come back up this year we've

{{00:01:26}}
seen that optimism and come back
into the private world in general.

{{00:01:30}}
And I'm seeing some of
that in FinTech as well.

{{00:01:33}}
I think we're seeing companies being
started, early stage companies.

{{00:01:36}}
We're seeing good deal flow
coming through our shop.

{{00:01:40}}
And, we take a very strategic oriented
view when it comes to investing in

{{00:01:43}}
Fintech, and we see that interest from
our business partners internally as well.

{{00:01:47}}
Excellent, excellent.

{{00:01:47}}
There's been quite a few down rounds as
well recently, as you mentioned there,

{{00:01:51}}
from the heavy days of 2021, 2022.

{{00:01:54}}
Do you think that consolidation
was needed, and do you think

{{00:01:56}}
we've found a fair level now
in terms of Fintech valuations?

{{00:01:59}}
In, in the private world, in the
venture capital world there's so little

{{00:02:03}}
information about these companies,
especially in the early stages, that...

{{00:02:08}}
Investors can only rely on public
market valuations, multiples, things

{{00:02:12}}
of that nature as their price deals.

{{00:02:14}}
And so in that sense, valuations are
lower in that sense, based on today's

{{00:02:20}}
public market multiples, right?

{{00:02:21}}
And that's how people are
underwriting these investments.

{{00:02:24}}
And so I think, is it
normalized or stabilized?

{{00:02:28}}
Whatever way you want to think about it.

{{00:02:29}}
There was a period of time when...

{{00:02:31}}
When the public markets were
fluctuating that people were in

{{00:02:35}}
wait and see mode, and now it seems
to be more stable more normalized.

{{00:02:39}}
One of the things that we think
about as far as our investing program

{{00:02:42}}
is concerned is taking the long
term approach having a long view.

{{00:02:46}}
These companies stay in our portfolio
for years, six, seven, eight years, and

{{00:02:50}}
we're reacting to market conditions that
can change, day to day or week to week.

{{00:02:55}}
And so it's very important to have
a very fundamental based approach

{{00:02:58}}
and have a long term view because
these are large markets and it takes

{{00:03:01}}
a while for companies to mature,
develop and be be a leader in a space.

{{00:03:05}}
And those are the kinds of
companies that we try to look for.

{{00:03:08}}
Excellent.

{{00:03:09}}
So what kind of funding trends
are you seeing at the moment and

{{00:03:11}}
which areas are seeing the most
kind of investment activity?

{{00:03:15}}
I think in the FinTech space
there are maybe three areas

{{00:03:18}}
that I would mention to you.

{{00:03:19}}
The first is we're focusing quite
a bit on the wealth tech space, and

{{00:03:23}}
some of our recent investments have
been in and around wealth tech.

{{00:03:27}}
An example is in Asia Pacific,
we invested in a digital wealth

{{00:03:30}}
manager by the name of Endowers.

{{00:03:32}}
And the idea is that the FinTech
revolution, depending on how you look

{{00:03:37}}
at it, started in either P2P lending or
started in mobile payments and things

{{00:03:41}}
of that nature, and it's come to every
area of FinTech, including wealth tech.

{{00:03:46}}
Wealth is an important area of investment
for us at Citi, and so being able to

{{00:03:51}}
serve that next generation of wealth
customers with great experiences,

{{00:03:56}}
doing things in a seamless way is an
area of focus for us, so that's been

{{00:03:59}}
an interesting space for us recently.

{{00:04:02}}
Second is, as the FinTech world has
matured, and as banks have also adopted,

{{00:04:07}}
startup capabilities we see financial
infrastructure companies getting mature.

{{00:04:12}}
So that's an area of interest for
us as well, things that perhaps were

{{00:04:15}}
being developed in house, internally,
on a custom basis are probably

{{00:04:20}}
available as platforms externally,
maybe as cloud capabilities.

{{00:04:25}}
And so that's an area of interest for us.

{{00:04:27}}
We saw some interesting recent
transactions happen, for example,

{{00:04:30}}
like a company like Pismo.

{{00:04:32}}
And so I think financial infrastructure
was and has been important and remains

{{00:04:36}}
important and we see that that maturing
landscape, which is very interesting for

{{00:04:40}}
a large bank like Citi because we need
that to be able to adopt, we can't work

{{00:04:44}}
with extremely early stage startups.

{{00:04:47}}
And then finally it's hard
to not mention Gen AI.

{{00:04:51}}
Gen AI is something that will impact
the financial services world deeply.

{{00:04:55}}
There are obviously challenges that
need to be overcome and things that,

{{00:04:59}}
that we need to work through as a, as
an economy and how Gen AI gets adopted.

{{00:05:04}}
But from end to end, whether it's from,
marketing, to fighting fraud, to serving

{{00:05:09}}
customers, Genai is going to have a very
deep impact, and it's an area that we've

{{00:05:13}}
been researching and getting smarter on.

{{00:05:17}}
Due diligence has also been in the
spotlight as well quite recently.

{{00:05:20}}
What are some of the key things that
you particularly look out for in your

{{00:05:23}}
investment partners, and maybe some
of the red flags that would cause

{{00:05:26}}
you to turn around and walk away?

{{00:05:29}}
Going back to something I mentioned
earlier, we take a very fundamentals based

{{00:05:32}}
approach and we do deep due diligence.

{{00:05:34}}
One of the advantages of a slightly softer
market compared to 2021 is you have a

{{00:05:39}}
little bit more time to get the work done.

{{00:05:42}}
In addition to thinking about our,
the strategic rationale for why we're

{{00:05:46}}
investing we look at all the standard
things that, venture capitalists look at.

{{00:05:51}}
Is it a...

{{00:05:52}}
Is it a sustainable technology advantage?

{{00:05:55}}
Is it a team that you can back?

{{00:05:57}}
A team that can take this
company significantly forward?

{{00:05:59}}
All of those kinds of things.

{{00:06:01}}
We look at Is the company
asset heavy or asset light?

{{00:06:04}}
That's another area, given what's been
happening with interest rates, that's

{{00:06:07}}
an area of consideration for us as well.

{{00:06:09}}
And the answers are not
always, easier, easier obvious.

{{00:06:13}}
And in addition to all of that,
the one other thing we think

{{00:06:16}}
about, we work in a syndicate.

{{00:06:18}}
These companies end up raising
capital from many investors.

{{00:06:21}}
And we also look at the quality of the
syndicate that we have, our co investors.

{{00:06:24}}
We want great people of high
integrity, working on these boards

{{00:06:28}}
and, providing that governance
to these startup companies.

{{00:06:31}}
So that's a that's an item
that we care deeply about.

{{00:06:34}}
Excellent.

{{00:06:34}}
And just to finish off then, what advice
would you give to companies looking

{{00:06:37}}
to get some investment from Citibank?

{{00:06:40}}
I'd just give general advice.

{{00:06:42}}
First of all, Whether it's city ventures
or more venture capital more broadly.

{{00:06:48}}
I think that the thing to be
thinking about is are you solving

{{00:06:51}}
a customer pain point today, right?

{{00:06:54}}
I think all of the other things relative
to the technology people, etc, all exist.

{{00:07:00}}
Competition, all of those exist.

{{00:07:02}}
But many times in the earlier stages,
it's that very amorphous sort of Cambrian

{{00:07:07}}
stage where you're putting the idea
together, you're thinking about the

{{00:07:11}}
product and thinking about who your
customers are and so on and so forth.

{{00:07:14}}
And the more time you can spend
to clarify that and sharpen

{{00:07:18}}
that focus, the better it is.

{{00:07:19}}
And that's something that I
repeatedly see something that early

{{00:07:23}}
stage entrepreneurs struggle with.

{{00:07:24}}
And that, is a good piece of advice.

{{00:07:27}}
Thank you so much for speaking
with us again, Arvind.

{{00:07:29}}
It's been a pleasure and thank
you so much for your time.

{{00:07:30}}
Thanks for having me,

{{00:07:32}}
Paul..

This is FinTech Futures at Finovate
Fall, and I'm joined by Citi Ventures.

Arvind, thank you so much for joining us.

Thank you so much again for taking
the time out to speak with us.

Just to get started, would you like
to give us a quick introduction to

I've been at Citi for
about 12 and a half years.

I run Citi Ventures it's Citi's strategic
investment group one off, I should say.

Prior to coming to Citi Ventures, I
was a partner at a venture capital firm

And I came to venture capital via the
tech world, I was a semiconductor designer

way back when I first got out of college.

I guess to start, it's been quite a tough
year for FinTech investment globally.

When we think about the FinTech world,
Citibank has been investing in FinTech

And we have seen that first wave
of FinTech startups come in, be

successful, become publicly traded
companies, and so on and so forth.

And I think FinTech in 2022 took
a little bit of a reset, just like

One of the things I've learned is
it's impossible to be completely

divorced from public market sentiment
in the private world, right?

And so just as the public markets
have come back up this year we've

seen that optimism and come back
into the private world in general.

And I'm seeing some of
that in FinTech as well.

I think we're seeing companies being
started, early stage companies.

We're seeing good deal flow
coming through our shop.

And, we take a very strategic oriented
view when it comes to investing in

Fintech, and we see that interest from
our business partners internally as well.

There's been quite a few down rounds as
well recently, as you mentioned there,

Do you think that consolidation
was needed, and do you think

we've found a fair level now
in terms of Fintech valuations?

In, in the private world, in the
venture capital world there's so little

information about these companies,
especially in the early stages, that...

Investors can only rely on public
market valuations, multiples, things

And so in that sense, valuations are
lower in that sense, based on today's

And that's how people are
underwriting these investments.

And so I think, is it
normalized or stabilized?

When the public markets were
fluctuating that people were in

wait and see mode, and now it seems
to be more stable more normalized.

One of the things that we think
about as far as our investing program

is concerned is taking the long
term approach having a long view.

These companies stay in our portfolio
for years, six, seven, eight years, and

we're reacting to market conditions that
can change, day to day or week to week.

And so it's very important to have
a very fundamental based approach

and have a long term view because
these are large markets and it takes

a while for companies to mature,
develop and be be a leader in a space.

And those are the kinds of
companies that we try to look for.

So what kind of funding trends
are you seeing at the moment and

which areas are seeing the most
kind of investment activity?

I think in the FinTech space
there are maybe three areas

The first is we're focusing quite
a bit on the wealth tech space, and

some of our recent investments have
been in and around wealth tech.

An example is in Asia Pacific,
we invested in a digital wealth

And the idea is that the FinTech
revolution, depending on how you look

at it, started in either P2P lending or
started in mobile payments and things

of that nature, and it's come to every
area of FinTech, including wealth tech.

Wealth is an important area of investment
for us at Citi, and so being able to

serve that next generation of wealth
customers with great experiences,

doing things in a seamless way is an
area of focus for us, so that's been

Second is, as the FinTech world has
matured, and as banks have also adopted,

startup capabilities we see financial
infrastructure companies getting mature.

So that's an area of interest for
us as well, things that perhaps were

being developed in house, internally,
on a custom basis are probably

available as platforms externally,
maybe as cloud capabilities.

And so that's an area of interest for us.

We saw some interesting recent
transactions happen, for example,

And so I think financial infrastructure
was and has been important and remains

important and we see that that maturing
landscape, which is very interesting for

a large bank like Citi because we need
that to be able to adopt, we can't work

And then finally it's hard
to not mention Gen AI.

Gen AI is something that will impact
the financial services world deeply.

There are obviously challenges that
need to be overcome and things that,

that we need to work through as a, as
an economy and how Gen AI gets adopted.

But from end to end, whether it's from,
marketing, to fighting fraud, to serving

customers, Genai is going to have a very
deep impact, and it's an area that we've

Due diligence has also been in the
spotlight as well quite recently.

What are some of the key things that
you particularly look out for in your

investment partners, and maybe some
of the red flags that would cause

Going back to something I mentioned
earlier, we take a very fundamentals based

FinTech Futures

Event Session

At the FinovateFall 2023 conference in New York, FinTech Futures caught up with Arvind Purushotham, Global Head of Citi Ventures, to discuss the current fintech funding landscape and which areas are seeing the most investment activity amid a tough macroeconomic climate.