Private Equity: Standard Chartered Wants to Combine Venture Capital with Internal Innovation

Euromoney, October 2018

Standard Chartered and venture capital have not been the best of friends in recent years. The bank has spent more than three years exiting its loss-making private equity arm, a process that is still grinding along now.

What to make, then, of SC Ventures, the new business unit launched out of Singapore in January?

Alex Manson, the former global head of transaction banking who heads the business, tells Euromoney that SC Ventures has quite different priorities to Standard Chartered’s previous private equity ambitions and in fact only one of the three lines of the new business is about venture capital.

“Our internal mission statement talks about rewiring the DNA in banking,” Manson says. “In transforming banking, there is an external and an internal element, and we think we need to do both at the same time and under the same roof.”

SC Ventures has three arms.

The first is responsible for creating catalysts for change and includes the eXellerator innovation lab. “We run what we call the intrapreneur programme, which encourages people in the bank to step forward with ideas and pitch them to a platform.”

This has something of the feel of ‘The Apprentice’ about it. On the 17th floor office the business inhabits in the Marina Bay Financial Centre there is a brainstorming room insiders call the Dragon’s Den, where people can pitch ideas to a group. People on the platform have investment dollars they can commit to these ideas and the best ones are crowdsourced internally and implemented.

Over 1,000 ideas have been submitted this way in the last six months.

The second arm of the business is a professional investment unit that manages Standard Chartered’s minority stakes in its fintech partners.

“In that sense it is different from a venture capital fund,” Manson says. “We don’t just invest in anything we think is interesting. It has to be relevant to the bank, by which we mean there is at a minimum an engagement in a successful POC [proof of concept] and an intention to implement production.”

Examples include Ripple, the distributed ledger technology company, in which Standard Chartered is an investor and a partner, developing global trade and payments applications; and Paxata, an enterprise information management company. “It’s not control. It’s influence, credibility, an alignment of interests,” says Manson.

The third business does look like a classic venture capital arm, except that it looks inward. This unit will sponsor and oversee new disruptive technology ventures that are at least partly owned by Standard Chartered.

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