The afternoon session saw discussions on insurtech, fintech and the impact of artificial intelligence technology on the investment process.
Kotaro Yamagishi, CEO of Keio University’s venture capital arm, Keio Innovation Initiative (KII), co-founded digital media company Gree and is still a board member, but told Global Corporate Venturing editor-in-chief James Mawson in a fireside chat at the GCV Symposium yesterday, that he had needed a new challenge.
KII, which was founded in 2015, fit Yamagishi’s personal interests, and he spoke about how his experience led to certain decisions with KII, where deals are split roughly evenly into two broad sectors: internet-of-things, artificial intelligence and IT-related technologies, and biotechnology and pharmaceutical-related investments.
Working at Gree often meant leading and growing subsidiary businesses before a specialist could be hired, something Yamagishi did for both Gree’s advertising and mobile gaming businesses.
That, and Yamagishi’s co-founder position at Gree, gave him the leadership and startup experience he is now utilising at KII. He also requires independence from the university’s establishment when it comes to investment decisions, and a different pay-scale to ensure the right staff are recruited.
Another fireside chat featured Jacqueline LeSage Krause, managing director of corporate venturing unit Munich Re/HSB Ventures and co-chair of GCV Symposium 2018, who spoke to Andrew Rear, CEO of sister unit Munich Re Digital Partners (MRDP), and Scott Walcheck, the founder and CEO of mobile insurance platform Trōv.
This talk delved into the insurance world and how Munich Re, one of the world’s largest reinsurance firms, operates beyond its core business of insuring insurance providers and providing cover for innovative, large-scale projects such as self-driving cars.
LeSage Krause moderated the discussion between Rear and Walcheck, who spoke about their working relationship and what both Trōv and MRDP are doing to innovate in the insurance sector.
MRDP was originally set up to handle the wave of insurance technology being developed, focusing both on tech that is building an experience around the customer, and on services that deal with the problems the sharing economy brings to the traditional insurance industry.
Trōv offers insurance for single items that can be activated through an app with one click. Rear told the audience how impressed he was with Trōv’s ambition and scope, and said it was enough to move the needle at Munich Re, not always the easiest task at a business that large.
MRDP’s involvement has enabled Trōv to enter new markets more quickly, and the balance sheet that allows it to assume greater risk, while Trōv got MRDP into areas they otherwise would not have entered, such as working with Waymo, internet technology group Alphabet’s autonomous vehicle division.
Mark Muth, director at professional services firm PwC, then moderated a session on financial technology that included Jalak Jobanputra, founding partner of VC fund FuturePerfect Ventures, and Benoît Legrand, CEO of financial services firm ING’s corporate venturing unit, ING Ventures.
Muth laid out the groundwork based on PwC’s 2017 report on the finance sector. 77% of institutions are planning to adopt blockchain by 2020, and there has been a 40% increase in investment per annum over the last four years in fintech more broadly, with total investment now standing at $40 billion.
Jobanputra emphasised how decentralisation is at the heart of FuturePerfect, while Legrand looks for disruption at the same time as maintaining a top-down view on ING’s key sectors.
Jobanputra’s answer to the central question of the discussion was an emphatic yes – she believes incumbents have the opportunity to innovate and partner with good fintech developers, aided by funds like her own at FuturePerfect.
However, Jobanputra pointed to the 2 billion unbanked people across the world and suggested that many banks remain slow to innovate, hindered by the post-2008 regulatory environment and an inability to manage mobile technology as well as they could.
Speaking specifically about blockchain, Jobanputra noted how Bitcoin was originally created to eliminate the need for banks, yet institutions are now using blockchain technology to increase the efficiency of their backend, while gaining new customers.
Legand took a more cautious position, noting that what makes a good fintech company might be different in five years to what makes one now. He wants to innovate at the border of the bank, but notes that banks could still be moving faster.
ING Ventures invests in areas where ING could leverage its commercial edge, but also where technology is emerging fast and has the potential to be disruptive, for example backing a fintech company that is directly competing against ING Spain.
FuturePerfect’s lab is not an accelerator, Jobanpuntra said, but a place for specific projects with commercial partners. This is a key place where FuturePerfect can interact and innovate with strategic investors.
Lastly, the discussion turned to initial coin offerings and whether Legand or Jobanpuntra thought they were an appropriate way to invest. Both offered a clear no, identifying regulatory uncertainty a key factor.
The last panel of the day focused on the influence exerted by new technologies on venture investing, examining how machine learning and AI are likely to affect venture deal sourcing, governance and portfolio management.
Moderated by John B. Riggs, principal and partner at professional services firm PwC, the discussion brought together Jonathan Serfaty, data scientist at telecoms firm Telstra’s corporate venturing arm, Telstra Ventures; Jonathan Pulitzer, a managing director for GE Ventures, a subsidiary of General Electric, in Israel and Europe; and Stefano Gurciullo, investor and technology lead at venture firm Redstone VC.
Gurciullo said: “I think data science will help a lot of capital investments. CVC is a people’s game that is a lot about having the right connections and identifying interesting targets. Data science is not just useful for inbound data, it can also help with finding targets on the investment side.”
Gurciullo suggested the data management software used by Redstone could, for instance, also help him and his team quickly get a thorough view of a potential portfolio company in a given niche or space, providing data that would otherwise take months to collect.
Telstra began using machine learning around seven months ago, applying it to deal sourcing, due diligence and portfolio management, Serfaty stated, saying: “There are a lot of companies out there and not so much information on them, so it is really about getting as much of that as possible, to give investors some sort of superpowers in their decision making.”
Pulitzer added: “We are definitely witnessing a dramatic change. At GE, we have used data science to pull together multiple signals, such as which accelerators are coming out with the most interesting dealflow, or which technology is the most conclusive.
“Although we are definitely utilising technology to guide us, we are not yet at the point where we are jumping in head first to use it as a proper tool in our investment strategy.”
Pulitzer’s observation raised the question of the extent to which AI should be involved in investors’ decision making, and whether having it serve as a “seat” on investment committees should be an acceptable practice.
Machine learning is a very useful tool, Gurciullo said, adding that investors cannot simply rely on data based on past investments, as “the past cannot tell us everything”.
Gurciullo added: “Future successful investments will likely differ from past ones, as some form of innovation is also needed; so the question really comes down to evaluating whether human intuition can be automated.”
The panellists generally agreed this process would and should always have some form of limitation, Pulitzer stating: “You can make computers as smart as you can, but CVC is an interpersonal business that will hopefully still require human interaction for many years to come.
“By using machine learning exclusively, you might miss out on things that have not been experienced yet, and there are still many undiscovered gems out there.”
– Additional reporting by Alice Tchernookova.