Northwestern Mutual VC Fund Leader Discusses Investment Approach
Earlier this month, Northwestern Mutual announced it would invest $50 million in early stage companies over the next several years.
The Milwaukee-based life insurance and financial services firm says the new fund, Northwestern Mutual Future Ventures, will invest $500,000 to $3 million apiece in startups.
According to the fund’s website, so far it has invested in LearnVest, Betterment, Rize Advisors, and Nyca Partners, which is itself a VC fund with dozens of portfolio companies. About a year after Northwestern Mutual led LearnVest’s $28 million funding round in 2014, the insurer acquired the New York-based fintech startup.
The Northwestern Mutual Future Ventures team comprises two venture partners and a five-person investment committee chaired by Rebecca Porter, vice president of corporate strategy at Northwestern Mutual. Porter recently spoke with Xconomy about the fund’s origins, what industries and technologies it plans to target with its investments, and other topics. Our interview has been condensed and edited for clarity.
Xconomy: Can you talk a little bit about your background and time at Northwestern Mutual prior to being named chairwoman of the new fund’s investment committee?
Rebecca Porter: I’ve really been with Northwestern Mutual for over 17 years. I was here in the late 90s and early 2000s in different roles across the company. I then consulted for the company [part-time] for about eight years, and then came back full-time in 2013.
My experience working in operations in technology and my work on client experience and more deeply understanding our clients is a key part that I bring. The focus of Northwestern Mutual Future Ventures is on how we can connect with other companies that are starting up and looking to solve clients’ needs in new ways. We want to be sure we are looking for opportunities that align with the value that we want to create for our own clients—to meet their needs today, but also to anticipate what those needs are into the future.
X: What led up to the decision to create this new fund?
RP: We have been actively scanning the fintech landscape and building relationships [for] many years and have investments in Betterment and LearnVest going back a few years, and with the acquisition of LearnVest in 2015.
Obviously, with the launch, Northwestern Mutual Future Ventures is new out in the marketplace. But the work that we’ve been doing and the relationships we’ve been building are really a continuation of the journey that we have been on for years. We’ve been looking for opportunities to engage with emerging companies, not just from an investment perspective, but from a partnership perspective—to be able to bring their insights into [our] company.
X: So you all decided to create a more formal structure around investing in some of the technologies and startups you had already been watching closely?
RP: I see this as more of an evolution over the last several years. In terms of “Why now?,” I’d put it in two camps.
First, we look at the landscape today and know the pace of change is happening much more rapidly. There is innovation that is accelerating as consumer needs are changing. And so with that rapid pace of technological advancement and some of the great ideas that we see forming, [we are] wanting to be able to dedicate more effort to connect with that innovation that’s happening externally.
The other piece really has to do with consumers themselves. You think about student loan debt and the way that is just skyrocketing for people coming out of college, and the burden they face as financial responsibility shifts from institutions to individuals. The way that the competitive market is looking to solve these needs for consumers is leading to growing financial insecurity. This is an opportunity for us to see companies and partner with them to grab [their] ideas and bring in some of that external perspective.
X: It seems like it’s pretty easy to draw a direct line from Northwestern Mutual’s core business to three of the fund’s focus areas (“changing consumer preferences,” “re-imagining customer experience,” and “transformational analytics and technologies”). But it’s not quite as straightforward with the fourth focus area, “digital health revolution.” In what ways does healthcare technology intrigue you and others at the fund?
RP: Really, physical health and financial health go hand-in-hand. For us at Northwestern Mutual, financial security is about protecting what matters most and growing your wealth to be able to achieve your aspirations. The best way to protect your loved ones and your financial future … your physical health and being there for them is a big piece of that. And then clearly as a company and with our [insurance] products, we’re there for when that health fails.
So when I think about physical health for people, there is a lot of innovation going on in that space to be able to help a consumer be more aware of their own condition.
X: With digital health, for instance, do you expect that you’ll invest in mostly consumer-facing technologies or would startups with a business-to-business sales focus be in play as well?
RP: I would say our overall focus is to be able to deliver value to consumers. That, I think, is broad in terms of how other companies are solving for that. They may be solving [problems] for institutions rather than individuals. But we may be able to leverage what they’re learning to be able to take that and add value, from a client perspective. So I wouldn’t rule out [investing in] companies that are addressing needs in other spaces.
X: Do you think it’s possible that the four focus areas could shift over time?
RP: I think as consumers shift, as their needs change, and as emerging companies look to solve needs in different ways, then our focus areas could evolve. But these are really core to what’s important to us and to our clients.
X: According to the Northwestern Mutual Future Ventures website, the fund will mostly be looking to co-invest alongside other venture groups and individuals. How do you go about finding folks to team up with?
RP: We have been building strong relationships over last the several years. It’s going to be continuing to do that and looking at [potential] co-investors, but then doing our own sourcing as well. I would say it’s really open-ended in terms of who we would partner with. But they have to be strong companies that are going to help us deliver that value to our clients.