Santander is spinning out its InnoVentures corporate venture arm and doubling its funding to $400m.
General partner Manuel Silva Martinez says that as a separate company the fund — renamed Mouro Capital — will be able to act faster and make bolder investments.
InnoVentures has a number of ‘unicorn’ companies in its portfolio, including Ripple, Tradeshift and Upgrade, and it has made some noteworthy returns, for example from the sale of iZettle to PayPal in 2018 for $2bn, and Kabbage last month. The internal rate of returns is in the 25–35% range.
But Silva Martinez believes that to continue to compete for the best startups the fund needs to have full autonomy.
“In VC you are really competing at the margins and you need to be able to move fast to get the best deals,” says Silva Martinez.
The rebranding is also designed to create a sense of separation between Santander and the investment company — to remove any doubt that entrepreneurs may have about Santander wanting to “spy” on their technology. Many startups can be nervous about dealing with corporate investors, and some of the best performing corporate venture funds have ended up separating from the parent company — Sapphire Ventures, for example, now operates separately from SAP.
“There can be a perception of commercial tension for some startups. With this move we have a very clear separation between the fund and the bank,” says Silva Martinez.
Silva Martinez adds that when the fund was first started in 2014, sourcing technology for Santander’s use was a key goal. But now the bank itself has evolved beyond that — it built its own foreign exchange platform, PagoFX, for example. The focus of the venture fund, therefore, is evolving to become more strategic, and may invest in startups that are not as obviously related to fintech.
“We think finance should evolve out of the traditional envelope. People are talking about the fact that big tech are becoming competitors to banks. We don’t think we should wait for them to come into our space, we should be thinking about ways we can also be going into theirs,” says Silva Martinez.
The increased size of the fund would allow the newly-named Mouro Capital to take bigger stakes in the companies it invests in.
Maija Palmer is Sifted’s innovation editor. She covers deeptech and corporate innovation, and tweets from @maijapalmer