Westpac puts another $50 million into Reinventure

Westpac puts another $50 million into Reinventure

Westpac Banking Corp has doubled its exposure to venture capital, investing a further $50 million into a second fund to be managed by Reinventure Group to invest in fintech start-ups including those which could potentially disrupt the bank.

The closure of Reinventure’s $50 million Fund 2 reflects Westpac’s belief that technology is reshaping financial markets and that the bank should hold equity stakes in a selection of potential disrupters as a defence mechanism to potential disintermediation. It also shows how Westpac wants to improve the experiences of its customers by developing relationships with start-ups.

The second fund will be managed by Simon Cant and Danny Gilligan, the co-founders of Reinventure and managers of the first fund. The pair are looking to add another venture partner and some new staff to identify and manage the new investments. Mr Gilligan said Fund 2 would seek to invest in 10 to 15 start-ups.

Reinventure’s first fund, which was seeded with $50 million in early 2014, invested in 10 companies: SocietyOne, Coinbase, Nabo, Zetaris, PromisePay, Hey You, Auror, Data Republic, Flare and Valiant.

Around 60 per cent of the fund has been invested in these companies with the remainder held back for follow-on investments. None of the investments have been sold so the fund’s returns cannot be measured. Many co-investors have invested alongside Reinventure in several of these start-ups, including Qantas, National Australia Bank, Fairfax, Seven, News Limited and Carsales.

Innovative solutions

Mr Gilligan said Fund 2 would look for investments in payments and lending along with start-ups seeking to outsource parts of the traditional financial services stack, including in areas of data, identity, risk, trust, artificial intelligence and application programming interfaces (APIs). It will also seek opportunities in technology platforms in industries adjacent to financial services such as real estate, health, retail and agriculture where financial services are embedded into products.

Westpac chief strategy officer Gary Thursby, who chairs Reinventure’s investment committee, said Westpac is seeking to partner with entrepreneurs developing innovative solutions to customer problems.

“The Australian fintech industry is developing rapidly and we continue to be impressed by the quality of the talent, ideas and technology that exists in the start-ups,” he said.


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Source: Westpac puts another $50 million into Reinventure | afr.com