Fintech
by Philippe Daoust | FinTech Magazine
Exploring the realm of venture capital reveals notable distinctions between traditional venture capital (VC) and corporate venture capital (CVC). Philippe Daoust, Vice President and Managing Director of NAventures, the CVC arm of the National Bank of Canada, recently shed some light on this divide.
National Bank of Canada is deeply committed to contributing to the Canadian financial ecosystem. Through NAventures, the bank invests in innovative startups and technologies that align with its strategic objectives. The bank’s commitment extends beyond supporting emerging technology companies; it strategically integrates these innovations into its operations, increasing overall competitiveness. By actively engaging the local startup ecosystem, the bank plays a critical role in driving economic development and technological progress nationwide.
Venture Capital vs. Corporate Venture Capital
VCs and CVCs differ significantly in their objectives, investment approaches, sources of funds, and strategic goals. Traditional venture capital firms primarily seek to achieve high financial returns in a relatively short period, typically five to seven years. Their goal is to identify and invest in high-growth startups with the potential for substantial financial returns upon exit, either through an acquisition or an initial public offering (IPO). These firms operate through general and limited partnerships, in which investors, known as limited partners, provide the capital and venture capitalists, or general partners, manage the investments.
National Bank of Canada Venture Capital Initiatives
The National Bank of Canada leverages two distinct corporate venture initiatives, NAventures and external initiatives such as Portage, each designed to meet different strategic needs and goals within the organization.
NAventures is fundamentally an internal initiative, meticulously crafted to support and promote the bank’s innovation and strategic objectives. Its core mission revolves around fostering internal growth and enhancing the bank’s core operations. “By focusing on improving IT capabilities, acquiring new customers and enriching the employee environment, NAventures aims to integrate innovative solutions directly into the bank’s framework,” says Philippe. This approach ensures that the initiatives undertaken are closely aligned with the bank’s long-term strategic objectives, creating value for both the institution and its customers.
Importance of ecosystem and partnerships
Being part of a larger ecosystem is key to NAventures’ success. Philippe emphasizes: “Corporate venture capital funds will be smaller and smaller, so you need to cultivate the ecosystem and dedicate a lot of time to it. That’s why we need a friendly environment that helps us find the best solutions.”
To achieve this goal, NAventures works with various partners to improve its offerings and services. One such partner is CGI, a Montreal-based consulting firm involved in strategic partnerships with NBC, particularly in areas such as open banking. Another partner is FlowX.AI, which works to improve the speed and capabilities of IT development through AI and new technologies.
Additionally, NAventures has developed strategies with investment firms such as Sagard, which owns several funds, including Portage, a leading FinTech fund in Canada. These partnerships ensure that the bank remains at the forefront of market trends and technological advancements.
Philippe explains: “We’ve been very good at connecting to the rest of the bank to really deliver that value, and the companies we invest in usually end up being useful within the bank. The way I think of it is a bit like gears. National Bank is the main gear, and we have all these smaller gears, which are all the FinTechs that we’ve invested in. When National Bank gives them a contract, it makes the smaller gears turn very quickly. If we only have one small gear turning, National Bank, the biggest gear, won’t turn. But we have 25 of them all turning super fast, you start to move that big wheel as well.
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