​NAB invests additional AU$50m into venture fund

The National Australia Bank (NAB) has announced investing an additional AU$50 million over the next two years into its corporate venture capital fund.

NAB Ventures, which was stood up in July 2015 with an initial AU$50 million investment from the bank, invests in startups that enable the bank to either execute what it does better or enter into adjacent areas that will drive value.

The latest funding takes the total to AU$100 million, with 100 percent of that purely to be spent on the startups.

Speaking with ZDNet, NAB Ventures managing director Todd Forest and NAB Ventures general partner Melissa Widner said the bank doubling the investment into the fund is an indication of the value that startups can bring.

"The first round was AU$50 million and we made 12 investments ... it's still early days in terms of success, but the companies have done well, we've started having integration into different parts of the bank, and it's been beneficial both for the startup and for NAB and our customers, and we're looking to further that and invest in additional companies," Forest said.

Over the past two and a half years, NAB Ventures has looked at 1,701 companies and only 12 have gotten through to investment stage.

"[Startups were] either too early or a bit too adjacent -- not really in our zone -- but the first thing we look for is great entrepreneurs that are passionate about solving a customer problem ... people that are revolutionary, that are thinking how this world is going to be 10 times better down the path," Forest explained.

In addition to making sure the startup boasts passionate founders, NAB Ventures also looks hard at where their idea fits with the bank, and also if the startup has the ability to scale.

"Is it going to be a big business, is there opportunity that as a standalone that company will be big company in five to 10 even 15 years? Will it enable NAB to really move the needle and either change the way operate or allow us to launch a new business line ... potentially allow us to have a AU$100 million impact at NAB," he continued.

"They're all doing something cool, that's why they ended up being one of the 12," Widner added.

As of November, NAB Ventures had made only five investments, which means the others have been funded in quick succession.

Startups backed by the fund include Data Republic, Veem, BRICKX, Basiq, Medipass, Wave, and Activepipe, with the others not disclosed by the bank as yet.

Read also: ANZ bank signs Data Republic for cloud-based data-sharing | NAB to create new digital platform for healthcare | NAB seeks 600 tech specialists as it gets serious about new digital business model

NAB Ventures is setup within NAB and falls under Digital and Innovation, and sits alongside its innovation hub NAB Labs, as well as NAB Digital.

"That allows us to coordinate ... part of our value is the investment piece, providing capital for these companies, which is really important for them to grow, however the bigger value is the strategic leverage that we can provide," Forest said.

"In some cases, we'll actually look at making an investment and once we make an investment, we'll move them into NAB Labs to do an experiment or a proof-of-concept to get them their first 100 to 500 users to test it out and make sure it works well, tweak it, and make it better.

"Moving into Digital, we have the ability to scale the product ... it's not easy to do within a big corporate, but it allows us to do that effectively."

According to Widner, the NAB Venture model is different to other venture funds, as she said it's rare the bank just has money to offer.

"I've worked in venture for a long time ... when we're investing, we're bringing something very specific and very unique ... most of the companies we've invested in, certainly all of the overseas ones were not raising money at the time we started talking to them. They had no shortage of people or companies trying to invest in them, it was very much around what value we were bringing," she told ZDNet.

"Both Melissa and I have been CEOs of startups, so we've been on the other side ... I think actually having that experience and that perspective -- it's a bit of a marriage," Forest added. "It's a long journey. We sit on the boards of these companies, we mentor them ... it's bringing that advice and insights."

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