Santander spins out its $400m FinTech venture capital arm into Mouro Capital

Santander is spinning out its venture arm into the new entity Mouro Capital, a new autonomous investment firm using its $400m in allocated funds to back innovate FinTech startups without the fear of the big bank spying on them.

The new offshoot will take over the responsibilities and portfolio of Santander Innoventures, the venture capital arm Santander launched back in 2014 with an initial $100m allocation.

Two years later, Santander upped the allocation to $200m and now, with the launch of Mouro Capital, that figure has doubled to $400m.

Since 2014, Santander Innoventures has supported 36 startups in Europe and the Americas, with companies like Ripple, Tradeshift and Upgrade having reached unicorn status.

“The creation of our FinTech venture capital fund in 2014 has allowed Santander to lead the industry in implementing new technologies, including blockchain, offering better services to our customers as a result,” said Ana Botín, executive chairman of Banco Santander.

Moreover, Santander Innoventures has also seen some noteworthy exits such as the sale of the Swedish startup iZettle to PayPal in 2018 for $2bn and American Express’ acquisition of Kabbage in August. In the latter case, no details about the pricetag for the venture were revealed, but Kabbage had been valued at $1.2bn back in 2017 when a SoftBank-led funding round injected $250m into the unicorn.

What that boils down to is that Santander Innoventures has enjoyed an internal rate of returns between 25% and 35% since 2014.

“Innoventures has almost doubled the cash invested, despite being relatively young for a venture capital fund,” said Botín. “Our goal is to build on that success, and by increasing our investment, while giving greater autonomy to the fund, we can be even more agile and further accelerate the digital transformation of the group.”

Manuel Silva Martínez (pictured) will co-lead Mouro Capital as its general partner together with Chris Gottschal. Silva Martínez joined Santander Innoventures five years ago and has led the fund since 2018. Gottschal joined Santander Innoventures from Blumberg Capital in 2019.

Santander was keen to brand the spinning out of Santander Innoventures into an autonomous entity as a logical step in its four-year €20bn digital and technology investment plan.

“By becoming more autonomous, we will gain in agility, attract entrepreneurial talent to the investment team, and further align to our entrepreneurs’ success,” said Silva Martínez. “We are eager to keep on delivering strategic value to Santander, enhancing our partnership and working with our portfolio companies to support the bank in shaping FinTech innovation.”

However, Sifted reported that one of the real reasons for the launch of Mouro Capital was to remove any doubt that the venture capital fund was simply a way for the bank to get the inside scoop on the startups’ solutions.

“There can be a perception of commercial tension for some startups. With this move we have a very clear separation between the fund and the bank,” Silva Martinez told the publication.

That being said, Santander is open about the fact that 70% of the fund’s current portfolio companies are working with the bank. That includes using solutions created together with Ripple, Nivaura, Tradeshift, Personetics and Crosslend, to name a few.

Copyright © 2020 FinTech Global

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