- Arvind Purushotham is the global head of Citi Ventures, the venture-investing arm of Citigroup.
- Purushotham said property tech, embedded trade finance, and wealth tech are all primed to grow.
- This year is set to be Citi Ventures most active in its 10-year history.
- See more stories on Insider’s business page.
As Citi Ventures celebrates its 10-year anniversary, Insider sat down with Arvind Purushotham, its global head, to discuss how the investing team is looking to compete in the increasingly competitive private markets.
This year is set to be Citi Venture’s most active in its history, Purushotham said. The group, which is the venture investing arm of Citigroup, is also adapting its strategy to look at a broader set of companies that can be integrated within Citigroup’s many lines of business.
Purushotham laid out three areas that he says are primed for significant growth and that align with Citi’s strategic ambitions as a global bank.
Citi Ventures solidified proptech as a vertical investment area at the end of 2019, just as the housing market was set to boom with the onset of low interest rates brought on by the pandemic.
Citigroup, for its part, has a two-pronged mortgage business that straddles consumers and the institutional market through securitizations and commercial real estate. The bank’s CEO, Jane Fraser, once headed CitiMortgage.
Home loan originations at Citi grew from $4.1 billion in the first quarter of 2020 to $6.6 billion by year end.
So far, Citi Ventures has invested in six proptech startups, like Roofstock, which diversifies distribution channels for buyers and investors of single-family residential properties, and Homelight, which generates leads on potential homeowners and sellers for realtors and mortgage brokers.
“Whether it’s an investment that supports the consumer side of the house, in terms of CitiMortgage and consumer residential mortgages, or it supports the institutional, financing side of the house, or some of them actually support both – we’re happy to make those investments work with those businesses to commercialize these investments,” Purushotham said.
Collaboration between startups and the wider bank is key to Citi Ventures’ strategy. About half of Citi Ventures’ portfolio companies have inked a commercial deal with the bank, or are close to it, Purushotham said.
Looking ahead, Citi Ventures is looking to improve and streamline the customer experience within the residential and commercial real-estate spaces.
“Obviously real estate is a really big percentage of the economy and so there’s a huge amount of digitization, automation, and ease of experience that can be brought about,” he said.
At Citigroup, a global bank that has a presence in more than 160 countries, treasury and trade solutions, or TTS, is big business.
The division accounts for a significant portion of Citi’s revenues each year – generating $2.1 billion in revenue in the first quarter of 2021 – and is a marker for Citi’s strength in international trade finance.
To that end, Citi Ventures has actively explored and initiated investments that can be integrated within the broader business of buying and selling goods and services on a global scale.
“Think of Amazon, where you go in and do a one-click purchase. You’ve identified what you want to buy, you’ve paid for it, and arranged for logistics, all in one fell swoop,” Purushotham said.
“What does that look like on the trade side? Can a corporate go in and place an order to buy materials or buy something else and organize logistics and pay for it, all in one fell swoop, in a completely digital fashion?” he added.
A prime example is Citi Ventures’ 2018 strategic investment in trade receivables startup High Radius alongside PNC. High Radius automates cash management and treasury systems for companies like Johnson & Johnson and TCL.
“Our TTS business, specifically the payments and receivables part of TTS, partnered with them. As people try to digitize and automate more of their AP and AR processes, HighRadius is a core component of that,” Purushotham said.
Over the past 10 years, the Citi Ventures team itself has grown to have a more expansive footprint. With offices in the US, UK and Israel, it has also broadened the geographic reach of its investment portfolio, which now includes companies in Southeast Asia and Latin America.
“We are one of the most global banks out there, so we want to support our businesses globally. That’s certainly been the intent from the get-go, but we wanted to first build some critical mass here before we started to become a more global organization,” said Purushotham.
While Citi Ventures is no stranger to wealth tech – it counts robo advisor Betterment and Goldman Sachs-acquired Clarity Money as current and former bets, respectively, in the space – the sector is “poised for one more spurt of innovation,” Purushotham said.
The sustained focus on wealth-management technology and personal finance management is already driving innovation within Citi’s new wealth division formed in January.
“We are seeing a once-in-a-generation wealth creation in many parts of the world,” Fraser and then-CEO Michael Corbat wrote to employees in a January memo, noting that building the wealth management business into “a key differentiator” is core to Citi’s strategy moving forward.
In February, for example, Citi Ventures invested in a deal that saw private-equity firm Motive Partners and Clearlake Capital buy InvestCloud, a Los Angeles-based startup providing cloud-based financial tools and portfolio management services.
To be sure, Citibank and Citi Ventures aren’t the only ones making investments for more of the wealth management market. JPMorgan and Goldman Sachs are two competitors that have also recently restructured their wealth units and doubled down on digitization efforts.
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