Global Corporate Venturing caught up with the three founding directors of insurance group MassMutual's corporate venturing unit to get the lowdown on their plans for the fund.
US-based insurance and financial services firm MassMutual will seek to invest up to $5m in each portfolio company through its newly formed corporate venturing arm, with an aim to make itself a more innovative company, according to the unit’s managing directors, Doug Russell, Eric Emmons and Mark Goodman.
Russell told Global Corporate Venturing: “The size of the fund is a $100m commitment from our general investment account, and we are targeting anywhere between $1m and $5m per investment.
“Once we have been up and running for six or so months we will be looking to make between three and six investments per year. We want to be disciplined in terms of the investments we are making, but we think we can be making up to five or six investments per year.
The fund was established in order to give MassMutual access to the new technology being developed by start-ups involved in the company’s areas of operation, which range across its insurance, retirement and asset management businesses, though MassMutual Ventures will also be expected to turn a profit for its parent company and in turn its policyholders.
Russell explained: “Our chief investment officer and I spent quite a bit of time over the course of 2013 with our CEO talking about ways in which MassMutual might become a more innovative company. The decision to start a corporate venture fund is an outgrowth of that work, and we think this is a mechanism or vehicle that potentially plays back into our broader business strategies.
“Not only will we be making investments in companies, but [we will be] seeing trends across the different areas in which we are looking to invest that will be advantageous for the company as well. [We can] gauge the speed with which change is happening and see new companies and new ideas sooner than we would otherwise. We think [this] in turn will make us a more innovative company, which will in turn serve our policyholders better.”
In addition to making direct investments in start-ups, MassMutual Ventures will also be able to offer portfolio companies the chance, should they be interested, to link up with it on pilot ventures or partnerships related to their technology in order to help get it off the ground.
The key sectors in which the unit is planning to invest include consumer internet, digital health and cybersecurity, but its main focus will be fintech, an area in which corporates in the financial services industry are rapidly beginning to take interest.
Emmons said: “This fund is primarily focused on financial technology, consumer decision making, especially as it relates to online consumer advisory experiences, and digital health, as well as things that affect businesses about the size and scale of MassMutual – think enterprise software, fast business-based process software or cybersecurity.”
Goodman added: “I think [fintech] has been an overlooked sector over the past decade or so but I don’t think it is underinvested now. If you look at deals like Wealthfront, Betterment and Learnvest, the Finovate conference and incubator down in New York, and corporate venturers like Box and American Express and some of the banks, there is really a lot of activity now.
“I think it is the right time. [There is] a lot of activity, a lot of innovation and a lot of entrepreneurs coming into the space, so it is a very good time to be looking at companies in fintech.”
