Matt Carbonara is a managing director at Citi Ventures and works out of the Palo Alto office. Matt strives to create win-win scenarios that provide customer engagement and product feedback for high-potential startups while motivating innovation and business transformation for both Citi Ventures and its clients.
In this interview, Matt discussed why the organization is spending more time on robotic process automation and other similar technology; their unique position in having direct access to Citi's assets; and how Citi brings global perspective and distribution when collaborating with innovative startups.
Matt Carbonara was named on Trusted Insight's 2020 Top 30 Corporate Venture Capital Investors.
Trusted Insight: What is Citi Ventures, and what is your role there as managing director?
Matt Carbonara: At Citi Ventures, we help drive innovation inside of Citi in order to bring better products and services to its customers and clients. We do that through the lens of investment, spending time with our colleagues inside of the business. We try to understand what innovations and improvements they’re looking for, by how they engage with the work of business and technology leaders across a number of different sectors. We look to see where they're trying to take the business 12-48 months out, what their key trends are, where the gaps are between, what they have today, and what they'd like to have in the near and long term. We seek to invest in category-defining companies that will cement the way a particular innovation plays out in the market. This will not only help drive the most innovation within Citi, but also bring growth and success to the companies and businesses.
We invest in those companies typically before Citi has any kind of a relationship. Our role is to make investments and bridge those companies into Citi: introduce them to the right stakeholders, help them get in front of the right people, help them tell the story the right way so that Citi can become a customer, and therefore help drive innovation in Citi, while investing in the category-leading company in a particular area.
We have over 50 portfolio companies today, two-thirds of which have a relationship with Citi that started after we made the investment. We have fine-tuned our radar-based on what we hear from our leaders at Citi, using that intel to find the best company solving that problem, investing in that company, and bringing them into Citi.
It also goes to say we're not dogmatic about trying to build relationships between our portfolio companies and Citi -- it doesn't always work. We realize a 65-80% batting average is good, but also that it's not going to work 100% of the time because startups pivot while priorities and leaders at Citi are going to change.
We invest in companies across six different focus areas -- two on the banking side, so (1) fintech and financial services plus (2) commerce and payments, and four on the enterprise side, (3) data analytics and machine learning, (4) security and enterprise IT, (5) customer experience and marketing, and (6) property technology. We spend a lot of time thinking about automation technology, for example, robotic process automation and technology that can automate and accelerate the speed of repetitive processes in the bank. This gives better customer and client experience while freeing people up to work on more important and higher-order tasks.
We have a team of about 14 people, 8 here in the Bay Area who split their time between San Francisco and Palo Alto, as well as 3 in New York, 2 in Tel Aviv, Israel, and 1 in London, England. We're typically investing anywhere between $2-10 million in a given investment, making roughly eight to twelve investments per year. From a stage perspective, I'd say we're relatively agnostic, but we do like to see a product and a few customers in the market, as that's typically the right time to engage Citi, helping most on the commercialization side.
In addition to the possibility of adding Citi as a client, our portfolio companies also benefit by having access to our tech council of about 100 execs. These executives include Citi representatives, as well as industry, thought leaders who are portfolio companies have access to. Our goal is to offer a 360-degree view of what's happening in a particular space. It's really important for us to understand the Citi perspective from the leaders inside of Citi, but it's also important that we bring a broader perspective both to ourselves and to the leaders we spend time with. It helps us give more potential customer introductions beyond Citi to our portfolio.
Trusted Insight: How has your time at Cisco and other venture units influenced your approach now Citi?
Matt Carbonara: What I learned from those different experiences was that each platform and company has its own set of assets that it can bring to help a particular startup. For example, at Comcast, they were very good on the media side — they own NBC Universal and can help the most with the media distribution side. As for Cisco, where they can help the most is on the channel relationship side. They have great relationships with their Fortune 500 CIOs through their 18,000 salespeople and can help companies scale through that channel.
Citi's assets are a little bit of a combination, which is interesting. We’re really big in financial services. We operate in 160 countries and can bring that scale, global perspective, and distribution when we partner with a financial services, fintech, commerce, or payments company. On the enterprise IT side, we are one of the largest spenders. It's been publicly said that Citi spends $8 billion a year on IT. We're a big spender there, so that makes us a big customer.
If you think about Citi, we really have two businesses. One is a global consumer bank with branches and online capabilities. Then, we have an institutional bank that banks corporations, so banking the Ciscos, Fords, and other corporations of the world. Through those relationships, we can try to also help our portfolio companies plus having built out this tech council. What makes Citi Ventures unique is that we have access to the assets of Citi, which in turn help our platform companies scale and be successful. We are focused on bringing a large enterprise perspective and large enterprise commercialization opportunities to our portfolio.
Trusted Insight: Many CVC peers are focusing on co-creation strategies. What are your efforts when it comes to that department?
Matt Carbonara: Yes, the interesting thing about Citi Ventures is there's really four pieces to it. There's the Citi Ventures investing team, which is the team that I'm part of. We report into the Chief Innovation Officer, Vanessa Colella. She reports into the CFO of Citi, who reports into the CEO. Vanessa also has three other parts to her organization, three sister organizations to ourselves if you will.
We have an internal incubator called D10X (or Discover 10X), which is focused on accelerating ideas within a business and testing demand with clients and customers. Then if there is demand, we put the idea through a stage-gate process and pair the idea with an entrepreneur. These are folks who have carried ideas from concept to production and commercialization in the outside world. We have two incubation tracks, one that's focused on consumer banks and one on the client bank.
Then we have a second incubator called Venture Studio, which focuses on building new products with clients in mind to drive financial inclusion for Citi's small businesses and individuals. For example, they recently launched City Builder, a data-driven platform that helps investors identify opportunity zones in cities across the country. The government has defined these opportunity zones as areas where they want to drive investment to raise the standard of living and the quality of infrastructure in those areas. Those zones have been defined, but there's not a lot of other data readily available for investors to reference. For example, how many people live there? What's the average house price? What's the median income? They are bringing all that data together in one place so people can explore these opportunity zones more efficiently. That's an example of something that our team has built based on what they see and hear from the market and clients in terms of demand. Those are the two pieces that deal with incubation and co-creation inside of Citi.
Last we have the Emerging Technology research team. It is a smaller group focused on identifying long term trends to inform what the bank should be thinking about three to five years out. They are exploring areas like blockchain, quantum computing, and what are the effects of 5G going to be on financial services and transactions.
That gives you a flavor of the things we are doing around co-creation, or as I like to call it, non-startup driven innovation.
Trusted Insight: We had the Tokyo Summit in 2019, and the highlight was the collaboration between new innovative startups and then large corporations, traditional players. How can we help foster more collaboration?
Matt Carbonara: I believe that trend will persist because there's a general recognition that innovation is happening much faster. It's harder for large companies to attract the talent coming out of universities that is required to drive that innovation. If you were to go to Stanford or MIT and survey the graduating class, "Okay, what do you want to go do?" a lot of them will say, "I want to go work at a startup." They are not saying, "I want to go work at large institutions." That means it's harder to find the talent in order to innovate. Plus the pace of innovation externally and the fact that if you're a large public company you are focused on the next quarter and not on innovation. It's hard to allocate resources for driving innovation 2-5 years out.
This whole move that we've seen around increasing corporate ventures and increasing corporate partnerships with startups is being driven by that need to capture innovation outside the organization. I believe this trend will continue and we'll continue to see people innovate around how that's done and how you capture innovation. That's really the role of Citi Ventures. We do that through the four pieces that I mentioned. I am part of the investment team, but there are three other sectors who are trying to capture that innovation that exists just within our team itself.
Trusted Insight: What are some of the challenges and hurdles you face in investing through the lens of a large traditional institution like Citi?
Matt Carbonara: The piece that we are focused on, that can be challenging sometimes, is that we are a large regulated institution. We are one of the few systemically important institutions to the financial system of the United States, if not the world. People are somewhat risk-averse in terms of how long it takes us to adopt new technology and how quickly we move. The biggest challenge is trying to get people to move more quickly on these things. Once we invest in a company, it might take us longer than most to get it commercialized and see the effects of the benefits.
The way I try to counter that is I try to build relationships with key people that I know can get stuff done inside the organization, those who I know are early adopters. Then, I try to focus my energies on those individuals in order to get those things accomplished. Often, to change a company requires working from the bottom up, cultivating relationships on an individual by individual basis. That is usually where it starts, and that's the way I approach it, though it is a challenge. Big companies don't move fast and trying to get them to move faster requires a lot of personal relationship building and handholding along the way.
View our full catalog of interviews here.
The full list of 2020 Top 30 Corporate Venture Capital Investors can be found here.
In this interview, Matt discussed why the organization is spending more time on robotic process automation and other similar technology; their unique position in having direct access to Citi's assets; and how Citi brings global perspective and distribution when collaborating with innovative startups.
Matt Carbonara was named on Trusted Insight's 2020 Top 30 Corporate Venture Capital Investors.
Trusted Insight: What is Citi Ventures, and what is your role there as managing director?
Matt Carbonara: At Citi Ventures, we help drive innovation inside of Citi in order to bring better products and services to its customers and clients. We do that through the lens of investment, spending time with our colleagues inside of the business. We try to understand what innovations and improvements they’re looking for, by how they engage with the work of business and technology leaders across a number of different sectors. We look to see where they're trying to take the business 12-48 months out, what their key trends are, where the gaps are between, what they have today, and what they'd like to have in the near and long term. We seek to invest in category-defining companies that will cement the way a particular innovation plays out in the market. This will not only help drive the most innovation within Citi, but also bring growth and success to the companies and businesses.
We invest in those companies typically before Citi has any kind of a relationship. Our role is to make investments and bridge those companies into Citi: introduce them to the right stakeholders, help them get in front of the right people, help them tell the story the right way so that Citi can become a customer, and therefore help drive innovation in Citi, while investing in the category-leading company in a particular area.
"We spend a lot of time thinking about automation technology, for example, robotic process automation and technology that can automate and accelerate the speed of repetitive processes in the bank."
We have over 50 portfolio companies today, two-thirds of which have a relationship with Citi that started after we made the investment. We have fine-tuned our radar-based on what we hear from our leaders at Citi, using that intel to find the best company solving that problem, investing in that company, and bringing them into Citi.
It also goes to say we're not dogmatic about trying to build relationships between our portfolio companies and Citi -- it doesn't always work. We realize a 65-80% batting average is good, but also that it's not going to work 100% of the time because startups pivot while priorities and leaders at Citi are going to change.
We invest in companies across six different focus areas -- two on the banking side, so (1) fintech and financial services plus (2) commerce and payments, and four on the enterprise side, (3) data analytics and machine learning, (4) security and enterprise IT, (5) customer experience and marketing, and (6) property technology. We spend a lot of time thinking about automation technology, for example, robotic process automation and technology that can automate and accelerate the speed of repetitive processes in the bank. This gives better customer and client experience while freeing people up to work on more important and higher-order tasks.
We have a team of about 14 people, 8 here in the Bay Area who split their time between San Francisco and Palo Alto, as well as 3 in New York, 2 in Tel Aviv, Israel, and 1 in London, England. We're typically investing anywhere between $2-10 million in a given investment, making roughly eight to twelve investments per year. From a stage perspective, I'd say we're relatively agnostic, but we do like to see a product and a few customers in the market, as that's typically the right time to engage Citi, helping most on the commercialization side.
"On the enterprise IT side, we are one of the largest spenders. It's been publicly said that Citi spends $8 billion a year on IT."
In addition to the possibility of adding Citi as a client, our portfolio companies also benefit by having access to our tech council of about 100 execs. These executives include Citi representatives, as well as industry, thought leaders who are portfolio companies have access to. Our goal is to offer a 360-degree view of what's happening in a particular space. It's really important for us to understand the Citi perspective from the leaders inside of Citi, but it's also important that we bring a broader perspective both to ourselves and to the leaders we spend time with. It helps us give more potential customer introductions beyond Citi to our portfolio.
Trusted Insight: How has your time at Cisco and other venture units influenced your approach now Citi?
Matt Carbonara: What I learned from those different experiences was that each platform and company has its own set of assets that it can bring to help a particular startup. For example, at Comcast, they were very good on the media side — they own NBC Universal and can help the most with the media distribution side. As for Cisco, where they can help the most is on the channel relationship side. They have great relationships with their Fortune 500 CIOs through their 18,000 salespeople and can help companies scale through that channel.
"We operate in 160 countries and can bring that scale, global perspective, and distribution when we partner with a financial services, fintech, commerce, or payments company."
Citi's assets are a little bit of a combination, which is interesting. We’re really big in financial services. We operate in 160 countries and can bring that scale, global perspective, and distribution when we partner with a financial services, fintech, commerce, or payments company. On the enterprise IT side, we are one of the largest spenders. It's been publicly said that Citi spends $8 billion a year on IT. We're a big spender there, so that makes us a big customer.
If you think about Citi, we really have two businesses. One is a global consumer bank with branches and online capabilities. Then, we have an institutional bank that banks corporations, so banking the Ciscos, Fords, and other corporations of the world. Through those relationships, we can try to also help our portfolio companies plus having built out this tech council. What makes Citi Ventures unique is that we have access to the assets of Citi, which in turn help our platform companies scale and be successful. We are focused on bringing a large enterprise perspective and large enterprise commercialization opportunities to our portfolio.
Trusted Insight: Many CVC peers are focusing on co-creation strategies. What are your efforts when it comes to that department?
Matt Carbonara: Yes, the interesting thing about Citi Ventures is there's really four pieces to it. There's the Citi Ventures investing team, which is the team that I'm part of. We report into the Chief Innovation Officer, Vanessa Colella. She reports into the CFO of Citi, who reports into the CEO. Vanessa also has three other parts to her organization, three sister organizations to ourselves if you will.
We have an internal incubator called D10X (or Discover 10X), which is focused on accelerating ideas within a business and testing demand with clients and customers. Then if there is demand, we put the idea through a stage-gate process and pair the idea with an entrepreneur. These are folks who have carried ideas from concept to production and commercialization in the outside world. We have two incubation tracks, one that's focused on consumer banks and one on the client bank.
"This whole move that we've seen around increasing corporate ventures and increasing corporate partnerships with startups is being driven by that need to capture innovation outside the organization."
Then we have a second incubator called Venture Studio, which focuses on building new products with clients in mind to drive financial inclusion for Citi's small businesses and individuals. For example, they recently launched City Builder, a data-driven platform that helps investors identify opportunity zones in cities across the country. The government has defined these opportunity zones as areas where they want to drive investment to raise the standard of living and the quality of infrastructure in those areas. Those zones have been defined, but there's not a lot of other data readily available for investors to reference. For example, how many people live there? What's the average house price? What's the median income? They are bringing all that data together in one place so people can explore these opportunity zones more efficiently. That's an example of something that our team has built based on what they see and hear from the market and clients in terms of demand. Those are the two pieces that deal with incubation and co-creation inside of Citi.
Last we have the Emerging Technology research team. It is a smaller group focused on identifying long term trends to inform what the bank should be thinking about three to five years out. They are exploring areas like blockchain, quantum computing, and what are the effects of 5G going to be on financial services and transactions.
That gives you a flavor of the things we are doing around co-creation, or as I like to call it, non-startup driven innovation.
Trusted Insight: We had the Tokyo Summit in 2019, and the highlight was the collaboration between new innovative startups and then large corporations, traditional players. How can we help foster more collaboration?
Matt Carbonara: I believe that trend will persist because there's a general recognition that innovation is happening much faster. It's harder for large companies to attract the talent coming out of universities that is required to drive that innovation. If you were to go to Stanford or MIT and survey the graduating class, "Okay, what do you want to go do?" a lot of them will say, "I want to go work at a startup." They are not saying, "I want to go work at large institutions." That means it's harder to find the talent in order to innovate. Plus the pace of innovation externally and the fact that if you're a large public company you are focused on the next quarter and not on innovation. It's hard to allocate resources for driving innovation 2-5 years out.
This whole move that we've seen around increasing corporate ventures and increasing corporate partnerships with startups is being driven by that need to capture innovation outside the organization. I believe this trend will continue and we'll continue to see people innovate around how that's done and how you capture innovation. That's really the role of Citi Ventures. We do that through the four pieces that I mentioned. I am part of the investment team, but there are three other sectors who are trying to capture that innovation that exists just within our team itself.
Trusted Insight: What are some of the challenges and hurdles you face in investing through the lens of a large traditional institution like Citi?
Matt Carbonara: The piece that we are focused on, that can be challenging sometimes, is that we are a large regulated institution. We are one of the few systemically important institutions to the financial system of the United States, if not the world. People are somewhat risk-averse in terms of how long it takes us to adopt new technology and how quickly we move. The biggest challenge is trying to get people to move more quickly on these things. Once we invest in a company, it might take us longer than most to get it commercialized and see the effects of the benefits.
The way I try to counter that is I try to build relationships with key people that I know can get stuff done inside the organization, those who I know are early adopters. Then, I try to focus my energies on those individuals in order to get those things accomplished. Often, to change a company requires working from the bottom up, cultivating relationships on an individual by individual basis. That is usually where it starts, and that's the way I approach it, though it is a challenge. Big companies don't move fast and trying to get them to move faster requires a lot of personal relationship building and handholding along the way.
View our full catalog of interviews here.
The full list of 2020 Top 30 Corporate Venture Capital Investors can be found here.