Banks embrace venture capital

Banks around the world are moving into the private equity and venture capital markets as a way of gaining access to new technologies that may have an impact in their markets.

The managing partner of Asian venture capital investor Arbor Ventures, Melissa Guzy, said a growing number of banks were investing directly in venture capital and private equity portfolios, as well as backing VC businesses.

Guzy, who was in Sydney last week to speak at the AVCJ Private Equity and Venture Forum, said: "They are looking for access to technology. They want to know what is going on."

She said it was also common for banks in Asia to be involved in fintech groups and to set up innovation centres.

Westpac is the big local mover in this area. It is the biggest funder of Reinventure, a venture capital fund with A$50 million of capital to invest.

Reinventure has invested in the peer-to-peer lender SocietyOne and, more recently, a social media platform called Nabo and a big data company called Zetaris.

Westpac has opened an innovation centre, as has Commonwealth Bank, where businesses are invited to come and work with the bank on digital solutions.

Westpac has also signed on as a corporate partner of Sydney's new fintech hub, Stone and Chalk. ANZ, HSBC Bank Australia, Macquarie Group and Suncorp Bank are also corporate partners.

Guzy said banks had to be careful about they manage their involvement in the venture capital market.

"They shouldn't get so involved that they start to dominate the investee company and set its direction," she said.

Guzy said there were good prospects for fintech investment in Australia.

"We have looked at a dozen companies that are addressing the Australian market and have the potential to offer a global solution. We have a term sheet out to one of them now."