Читать книгу Transactional to Transformational - Christer Holloman - Страница 30

‘It was necessary to stop being a spectator and become a player in the ecosystem.’

Ricardo Forcano, former CIO

In 2009, parallel to the global financial crisis and at a time when the concept of fintech did not even exist, BBVA had a vision that would radically change the course of its strategy: in a few years a structural crisis was going to occur in the traditional banking business model. Predictably, not only would it be necessary to compete with traditional banks, but all kinds of technology companies, from giants like Google to small startups that were going to enter the financial business. In Silicon Valley, some companies were starting to build interesting financial services projects, especially in the world of payments, and BBVA felt the need to be connected with all the innovation that was emerging there. The need went beyond simply thinking about how to compete with these new companies, but was much more structural. How could a bank change the way it works to adapt to the way these companies use technology?

At that time balance sheet investing, CVC (corporate venture capital), e.g. direct investment by large corporations in external startups, already existed in other industries. BBVA began to explore the strategic initiative of setting up a separate venture capital fund to better understand incipient competitors, without losing sight of the fact that the fund also had to function at a financial level in order to be sustainable and to be a relevant player in the startup ecosystem.

In 2011, Ricardo Forcano, in the Madrid offices, and Jay Reinemann, in San Francisco, joined BBVA in order to promote this initiative. One of the first problems they identified was how to best get in touch with the ecosystem and understand how it works. As such, it was decided that it would be best to invest in a couple of funds that were already dedicated to investing in startups and learn from them. Thus BBVA completed its first investments in Silicon Valley in early 2012 with an investment in the seed‐capital fund and incubator 500 startups and the fintech fund Ribbit Capital. In all, 500 startups were founded by investor and entrepreneur Dave McClure, who previously worked with companies such as PayPal, Facebook, LinkedIn, Mint and Microsoft, and Ribbit Capital was a new Silicon Valley‐based venture firm led by serial entrepreneur Meyer Malka.

After this experience, BBVA decided to start investing directly in startups. BBVA completed investments in companies such as SaveUp, FreeMonee and SumUp. SaveUp was a startup that partnered with financial institutions to apply gaming techniques to encourage savings, debt reduction and financial education. FreeMonee developed a consumer gift network for retailers to offer gifts to their consumers through their banks. SumUp is a global technology company and the leading mobile point‐of‐sale (mPOS) company in Europe. Thanks to SumUp's technology, small merchants around the world can accept card payments anywhere using a mobile device.

During these operations, BBVA realized that there was another problem. Due to its corporate and legal implications, the bank's decision‐making process was very complex. There were too many layers of decision‐making processes, which took too long when agility was necessary to be competitive in the ecosystem. That was when BBVA Ventures, the first specific vehicle in the United States, began to take shape. It was set up in Silicon Valley so it could invest in startups at a much faster pace and this led to the creation of Propel.

BBVA Ventures was originally founded in 2012 to provide funding and expertise to promising technology companies disrupting the financial services industry. Until 2016, the group worked with entrepreneurs and co‐investors in the US, Mexico and Europe, becoming a long‐term partner in their success. However, captive bank funds have less freedom, less speed, and not a very good perception from early‐stage companies.

BBVA was seeing some adverse response to BBVA Ventures, based on the stereotype that some venture capitalists hold against corporate investors. Because they are often gatekeepers to opportunities, BBVA did not always have access to information until potential opportunities were already gone. Startups were wary of corporate venture funds, concerned about conflicts of interest and long‐term commitment.

In addition, the US Bank Holding Company Act limits the manner in which banks can invest, stating in some instances that banks can hold no more than five percent of certain ventures. For an early‐stage company, that may not amount to much at all, so the bank was sometimes limited to later‐stage companies or forced to remove voting rights and the like to remain in compliance with bank regulations. The net effect of being able to invest smaller amounts limited BBVA Ventures role as investor to be more of a follower than a lead investor.

This friction was avoided by the establishment of Propel as an SBIC (Small Business Investment Company).