Embattled bank ANZ has shut down its venture capital arm, 1835i, just three weeks after cashing in its chips in Airwallex – US$44 million ($A67m) stake sold to the fintech’s founders and executives.
The writing was on the wall for the business, which still had 10 companies in its portfolio, when ANZ, under new CEO Nuno Matos, also killed off consumer cashback fintech Cashrewards last month because had not performed to the bank’s expectations.
1851i invested more than $100 million, including a $76 million acquisition takeover of the former ASX-listed business in 2022. It was just a year ago that Cashrewards announced a partnership with the ANZ Plus app.
ANZ is in the process of cutting 3500 jobs in the next 12 months as part of a major restructure under Matos. Meanwhile, the bank is facing a $240 million fine after cutting a deal with the corporate regulator, ASIC, over four separate proceedings involving misconduct across ANZ’s Institutional and Retail divisions.
1835i, led by CEO Justin Greenstein, was a team of 14. The VC began life in 2019 as ANZ Ventures before rebranding as 1835i – the year ANZ was founded – in mid 2021. 1835i operated as an external investment management company. Startup Daily understands the entire team has been made redundant.
An ANZ spokesperson said the bank had established a non-operating holding company structure that provides much of the structural and regulatory flexibility to undertake investment activities without having to engage an external investment management company.
“Given this, it now makes sense for ANZ to wind up its 1835i trusts which will result in ANZ’s arrangements with the external management company, 1835i Group, ending,” they said.
“Most investments currently held within 1835i will be transferred to ANZ’s non-bank holdings company.”
1835i’s head of ventures, David Rowe, presents Startup of The Year to Dr Paul Barrett from Hysata at the 2023 Startup Daily Best in Tech awards. Image: Supplied.
But the $67m Airwallex sale – handy petty cash when you have a $240m bill to pay – suggests the bank’s appetite for risk and investment in emerging fintechs has waned dramatically in favour of focusing on the balance sheet. A non-bank holdings company is not the same as a VC firm, which generally takes a hands-on approach its portco founders to assist in their success.
1835i had around a 1% stake in one of Australia’s most successful fintechs, having first joined the Airwallex cap table in April 2020 during a $254 million Series D, at a US$1.8 billion valuation. They doubled down in 2022 during a 2nd encore of a Series E. A $232 million Series F in May at close to A$10bn valuation amid talk of an IPO in the next few years implies there’s more upside to come for patient investors.
For comparison, CBA’s US$300m investment in Swedish buy-now-pay-later Klarna paid off handsomely when the fintech listed on the NYSE last month at more than 2x the price CBA paid for it 5 years ago.
The investment is now worth around A$1bn.
CBA sold a small stake in Klarna – around 1.6 million shares worth around $100m – less than 10% of its total holding – and still has more than 17m shares.
Meanwhile, CBA’s VC arm, x15ventures, announced a partnership with Dom Pym’s fintech fund, Triple Bubble, just a fortnight ago.
The other big four banks, Westpac and NAB still have their own venture bets – Reinventure and NAB Ventures.
Startup Daily contacted 1835i for comment but did not receive a response. We’ll update if we do.
