NAB doubles down on venture capital fund

NAB Ventures' Melissa Widner and Todd Forest

NAB is doubling down on its $50 million venture capital fund NAB Ventures, by adding another $50 million to the pot over the next two years.

The fund has invested in 12 start-ups since it was announced in 2015 and plans to back a similar number by 2020.

“The board deciding to double it is a really strong vote of confidence – that they like what Ventures is bringing to the organisation,” NAB Ventures general partner, Melissa Widner told CIO Australia.

“Two and a half years has gone quickly, and I’m proud of the investments we have made, the progress of the companies we have invested in and the opportunities we are helping to unlock,” she said.

The best known of the businesses invested in so far is Data Republic – the Sydney-based start-up which has built a data exchange platform and marketplace for organisations to exchange data and collaborate on projects in a secure environment – which also secured funding from Qantas and Westpac.

Others include B2B global payments FX platform Veem, based in San Francisco; health payment start-up, Medipass, from Melbourne; Toronto cloud-based financial management software Wave; and property investment platform BrickX. Five start-ups NAB Ventures has backed have not yet been publicly announced.

Widner said that the original $50 million fund had not yet been depleted.

“We’re super excited. It’s still early days but we’re really happy with the progress,” said NAB Ventures managing director Todd Forest.

“We are focused on delivering long term strategic benefits, in working with start-ups from the bottom up and optimising opportunities to drive value into NAB, whether by efficiency gains or enhancing the customer experience. Some of these will take years and years to pay off and get deep integration but we’re on that journey,” he said.

Start-up lens

NAB Ventures has multiple benefits for the bank, Widner says, including “an ability to partner with fintechs, help our culture become more innovative, and its helped to provide a lens for the bank and several people throughout the bank to what’s going on in the fintech ecosystem”.

She says that the Ventures team has spoken to thousands of start-ups, tracked more than 1500 companies and looked at more than 300 serious opportunities.

Around 80 per cent of the investments are “enablers for NAB to allow us to do something quicker, faster or adjacent to the bank” Forest says, with the rest for firms that are “very disruptive to banking, changing the way certain financial product is built or consumed”.

“We don’t invest with the plan to buy,” Forest adds. “It is potentially possible but that is very much not the path. We look to make minority investment stakes…There could be opportunity to acquire but that is not the path or focus of our funds.”

Over the next two years, areas of interest for NAB Ventures include SME, wealth, cyber security, AgTech, and data and AI.

In November last year, NAB announced some 6000 employees will be made redundant (while creating 2000 new tech-focused full-time positions) as the bank simplifies its structure, automates more processes and increasingly focuses on digital channels.

“A lot of that will be done through better use of data and AI going forward,” Widner added.

More than dollars

The venture capital fund game has changed somewhat since NAB Ventures – which sits within NAB’s digital and innovation portfolio – launched.

Widner counts about 13 corporate venture capital funds in Australia compared to half that amount in 2015.

“So it’s grown quite a bit,” she says. “For companies that are further along and have their pick of investors, there’s no shortage of money for them. They’re looking only at investors that can bring strategic value and if you’re money only it’s hard to get into these companies that have already proven themselves. Our value is not limited to the dollars we invest.”