Santander spins out its $400M fintech venture capital arm, now called Mouro Capital

Santander, the Spanish multinational banking giant, is announcing that its fintech venture arm is to be spun out and will be managed more autonomously going forward.

Previously known as Santander InnoVentures and established in 2014, the VC is being re-branded to Mouro Capital. It will continue to be headed up by general partner Manuel Silva Martínez, who joined InnoVentures five years ago and has led the fund since 2018, and senior advisor Chris Gottschalk, who joined from Blumberg Capital last year.

Noteworthy, despite its new-found independence, Santander will remain Mouro Capital’s sole investor/LP, including doubling its current commitment, seeing the VC have $400 million in allotted funds.

However, my understanding is that by being managed autonomously from the multinational bank, Mouro will be able to invest more nimbly, including placing bets adjacent to pure fintech or financial services and in startups that could more directly compete with Santander’s own product lines. It should also help remove any market perception that portfolio companies aren’t independent of the incumbent bank, in terms of future investment or partnerships with Santander competitors.

Meanwhile, Santander InnoVentures was an early backer of a number of so-called unicorns (companies valued at more than a billion dollars). They include Ripple, Tradeshift and Upgrade. It has seen a number of exits, too, including iZettle to PayPal in 2018 for $2 billion, and Kabbage, acquired by Amex last month.

“Mouro Capital aims to bring its fintech expertise, global network and strong track record in successful investments to early and growth-stage startups globally. The fund will continue to deploy capital across Europe and the Americas, primarily leading investment rounds with initial investments of up to $15 million and further follow-on reserves,” says Santander.

I put written questions to Mouro Capital general partner Manuel Silva Martínez to find out more. The following Q&A has been lightly edited.

TechCrunch: What does this enable the fund to do that it couldn’t already? Does its independence enable it to be more aggressive with investing in products that could compete directly with Santander’s own services and products? Or it is more about speed in relation to the investment committee making quicker decisions?

Manuel Silva Martínez: Santander InnoVentures was fairly optimized as a corporate venture capital fund in terms of operations and speed of investment. However, the evolution into the Mouro Capital structure allows for extra alignment with entrepreneurs and co-investors (their success being the #1 objective), even faster/nimbler processes, and potentially a bolder investment strategy within the themes and investment policy agreed with our Limited Partner.

Shifting to a separate brand also reduces any potential affiliation that entrepreneurs may fear as potentially conflicting (commercially, IP), further reassured by a cleaner legal separation. On the change of the investment policy point, indeed Mouro will deploy a bolder investment strategy, that may involve investing in perceived competitors (which has been done in the past, e.g. neobank Klar in Mexico, lender Creditas in Brazil, or Curve in the UK), but this still fits into the logic that, if a venture capital affiliated with an industrial player should be a lighthouse for the ‘industry to come’, investing in emerging competitors that may reshape the future/long-term competitive landscape is just as aligned as any other topic.

In addition to that, Mouro will also explore the ‘boundaries’ of financial services, so you can expect to see Mouro invest from time to time in areas such as proptech, mobility, logistics, edtech, etc.

How big is the current team in terms of investment members and other support? And how is this going to change going forward? i.e. further operational/portfolio support or new investment partner members, etc.

The current investment team has six members, with the Finance, Legal/Compliance and Communications also internalised (so, extra three people). The team will indeed grow. Still early to say, but we would expect the investment team to add another 3-4 professionals with backgrounds aligned with our values (fintech expertise, entrepreneurial/operational expertise, exposure to specific networks we are interested in, esp. in Europe).

In addition to that, we will be building a ‘business development’ and operations support team to assist our companies with their growth needs and also with building mutually beneficial relationships with Santander and across the portfolio.

Aside from being broadly fintech/financial services focused, perhaps you can share a bit more on the Mouro thesis going forward.

As you say, we take a very broad view to the future of financial services, looking even beyond today’s industry boundaries. We ask ourselves fundamental questions and build strong theses around topics we are passionate about while keeping an open mind to new ideas that challenge our beliefs. In a way, we operate along three horizons that are complementary in addressing different angles of where we see the industry going:

  • In the short term, we invest in technologies that allow incumbents to make the transition into digital through better processes. Questions like: how can we bring automation and real-time applications into banking infrastructure? How can we build richer data ecosystems? What new client value propositions are emerging in developed and developing markets? How can banking services be delivered through APIs? How can finance be embedded in third-party journeys?
  • There are also companies that have superior capabilities (technology, data science, installed capacity) that, combined with banks or other startups, could build new businesses or re-engineer businesses from scratch. Questions like: how are novel technologies and new engineering paradigms (artificial intelligence, blockchain, quantum computing) changing how banks work? What emerging enterprise software utilities and platforms will be the gateway to tomorrow’s financial services? This is about building new businesses within the status quo of today’s industry by lining up the right resources and players.

  • More for the long term, we also look at how the industry is meant to evolve and reinvent itself, potentially by even transcending itself and crossing over with other industries to create new white-spaces. Questions like: how can industries be more integrated and converge into new white spaces fueled by finance? What is the role of money in a data-rich world?