Beyond the Pitch: Citi Venture’ Arvind Purushotham Talks CVC Credibility and Goal Alignment

Beyond the Pitch: Citi Venture’ Arvind Purushotham Talks CVC Credibility and Goal Alignment

Interviewed by on March 13, 2024

Like many corporate venture leaders, Citi Ventures head Arvind Purushotham found a conduit to the industry through his electrical engineering background. Unlike many whose careers drifted or abruptly veered into the job, Arvind told Corporate Venturing Insider that his route has been relatively linear.

Intel to Ventures

It started in 1995, with his position as a design engineer at Intel, where he worked on Pentium chip designs and Pentium-powered mobile products. After two years, he was promoted to program manager, where he coordinated the successful design and launch of the Mobile Pentium II.

After leaving Intel in 1999, Arvind spent the next two years earning his MBA from Harvard Business School. Academia also allowed him to reevaluate his career choices.

“There was always that entrepreneurial bug in me, but I was also very curious about ventures,” Arvind recalled. “So (in 2001) I ended up going to one of the older firms in Silicon Valley called Menlo Ventures.”

Menlo’s “really smart people and very collegial environment.” attracted him, along with its leadership roles on many intriguing investments in a competitive environment and its veteran status; It had already launched 11 funds. Menlo was established and would provide a great opportunity for Arvind to learn what venture capital was all about. He didn’t regret the choice. He stayed for nine years, eventually becoming the group’s managing director.

Why Citi Ventures?

In 2011, Citibank was looking to beef up its corporate venture capital group. Since the dot-com boom, bubble, and bust, the financial sector had seen increasing digitalization, with a number of new entrants trying to disrupt the hold of large existing financial institutions. Many of the rising companies that proved successful were bought out by those same large banks. It was the dawn of what became “fintech,” one of the most attractive sectors for investors.

Investors, including Arvind, thrived during this time by getting in on the ground floor with promising fintech startups. Citi recognized his success and the sector’s meteoric rise. It thought it prudent to strengthen its own venture group, even while during the mid-2000s, corporate venture capital groups acquired negative reputations among founders, Arvind said.

“Corporates asked for special terms,” he said. They were hard to work with. They moved at a very slow pace.”

Corporations also were more motivated by the potential to acquire companies. Entrepreneurs and other investors became hesitant to work with investment arms run by large companies. However, in 2011, Arvind felt he could help Citi overcome the sector’s image.

He joined Citi Ventures as its head in 2011. He was not totally in the dark. Arvind knew corporations were uniquely equipped to deliver value to startups.

“My wife used to be at Intel Capital for seven years, so I’d learned a little bit about that just by talking to her,” he said. “So when I came on board here, we wanted to design and put together (a system) very easy for start-ups to work with. We would operate like any other VC from an investment standpoint and try to be fully aligned with the other syndicate team members, not asking for rights of first refusal on an acquisition.”

The team would not insist on unreasonable terms and would work closely with stakeholders, which could facilitate the entrepreneurs’ interactions and build relationships with other investors.

Citi was uniquely positioned to break this barrier. As a bank, it is used to taking risks, making intelligent investments, and being familiar with investment terms.

“We were able to have terms that were substantially similar to those that startups’ institutional VCs had,” Arvind said. “That way, the incentives were aligned.”

Arvind and his team acted much more like a financial venture capital group. Similar goals generated less friction within syndicate partners, allowing Citi Ventures and other investors to focus on providing sage advice and value to the entrepreneurs.

Providing Value

Citi Ventures champions entrepreneurs within Citi, advocating for their needs and facilitating connections with internal business stakeholders.

“Citi Ventures introduces over 100, 150 companies every year to different businesses and partners across Citi,” Arvind noted.

This support helps entrepreneurs navigate the large organization’s complexities and build relationships that can lead to partnerships or vendor agreements. Arvind and his team further leverage Citi’s global banking power to connect entrepreneurs with other businesses within its portfolio, particularly those in the Global 2000. The venture team assists in promoting portfolio companies’ products in the right forums. A number of Citi’s partners have joined a ‘tech council’ Citi Ventures has assembled to advise entrepreneurs, expand their reach, secure partnerships, and gain insights into the needs of large corporations.

Another value add is Citi Ventures’ platform function that offers founders a range of support services. The team hosts events and facilitates knowledge sharing.

“Our approach is to be very collaborative; we do a demo day every six months,” he said.

These allow entrepreneurs to showcase their companies to Citi stakeholders and other industry players. Partners often send subject matter experts and decision-makers to these events instead of top management, so portfolio companies interact with potential direct contacts. Additionally, Citi Ventures organizes events centered on specific themes or industries, providing opportunities for entrepreneurs to connect with potential customers, investors, and experts.

What’s Next for Citi?

In this fast-paced environment, Arvind is interested in helping entrepreneurs in several areas. The ecosystem is diverse. However, wealth tech and AI have caught Arvind’s attention as especially relevant to Citi. For the last 18 months, Citi Ventures has invested in wealth tech. The pandemic saw a new period of increased digitization. A new wave of fintech companies focused on helping everyday consumers invest and manage their finances. Arvind recognizes that “wealth customers expect modern customer experiences, and it’s an area of focus for us at Citi as well.” Thus, Citi is watching and assisting companies in this ecosystem to see where they can add value and work together.

Arvind also maintains that new advances in artificial intelligence are crucial for the future of Citi.

“In financial services, AI is something that can be beneficial end-to-end,” he said. “From the front-end marketing to personalization, all the way to operations and risk and control, and fraud detection, and so on.”

The applications of machine learning and generative AI to save time and generate materials are endless. It is changing many fields, and Arvind is committed to nurturing the growth of the future.