Q&A: Inside Prudential's $300 million venture fund
Prudential recently announced the launch of independent multistage venture firm PruVen Capital. Backed by the insurer and led by industry veteran Ramneek Gupta, PruVen’s first fund will invest $300 million in transformational startups in insurance, financial services, real estate, digital health care and enterprise tech. Initially, PruVen will focus on North America and expand over time to support Prudential’s businesses globally. Gupta spoke with Digital Insurance in December 2020.
Digital Insurance: Can you tell us PruVen’s origin story?
Ramneek Gupta, Founder & Managing Partner, PruVen: As is already well-known, Prudential has been on a multi-year, multipronged journey towards becoming a technology led business. To tap into the innovation occurring outside of its four walls, Prudential sought to become closer to the startup ecosystem. After analyzing what works well for creating lasting value, and what’s less successful, Prudential decided on an investment model designed to leverage the best of both worlds – the agility of an independent venture capital firm coupled with the domain, distribution and assets of one of world’s largest insurers.
That’s why PruVen was founded as an independent firm that offers its teams the environment and compensation expected in the venture industry while also being tightly integrated with, and 100 percent funded by, Prudential to enable leveraging the assets, expertise and scale of a respected global brand.
DI: Could you expand on the “tight integration” with Prudential and how you envision it will contribute to the success of PruVen’s startup entrepreneurs?
RG: We’re in the process of designing what’s called the Prudential Catalyst Network to serve as bridge between PruVen’s portfolio of startups and Prudential’s internal resources. Drawn from across the Prudential landscape, the network will include senior leaders and day-to-day execution team members within five primary businesses or functions: Pru U.S Businesses, Asset Management (PGIM), Pru Japan, Pru Emerging Markets and Tech. Catalyst team members will facilitate staying aligned with Prudential’s needs within each of these areas, assist with forming the right partnerships and help produce outcomes for our portfolio companies. This includes, but is not limited to, conducting POC’s [proofs of concept], pilots and onboarding companies that ultimately become part of the Prudential ecosystem. Catalyst is the unique value proposition we offer startups for working with us.
DI: The PruVen announcement mentioned the firm has “launched its first fund,” which implies funds subsequent to the initial $300 million, could you tells us more?
RG: PruVen is being built as a lasting venture platform based on the standard 10-year fund model. The first five years are considered the investment period, where the majority of the capital is expended, and the last five are the growth and harvesting period that generates returns. Once capital in a fund is expended, the firm starts raising capital for the next fund. So, PruVen is expected to be a multi-fund platform that will last several decades.
DI: The announcement also featured the names core investment team members. What’s your talent acquisition strategy and the PruVen’s envisioned size?
RG: I’ve two team building principles. The first is having a unique combination of what I call “IQ + EQ,” for investment quotient and enterprise quotient. The former is the ability to find the very best startups, build relationships and work in partnership with them on creating iconic companies. The latter is the ability to leverage the assets of a large enterprise funding partner, like Prudential, to help our startups grow.
The second principle I call compatibility and complimentary, but not similarity. In other words, I wanted people who are culturally compatible and have complimentary skill sets but also bring unique backgrounds, experiences and toolsets.
As for company size, it’s envisioned we’ll have five to six partners and principals along with five to six associates. We’re also supported by a CFO and a legal and compliance lead from Prudential. Thus, we expect a team of about 12 to 14 people.
DI: What about you? What attracted you to found this firm, rather than continuing to co-lead Citi’s venture group?
RG: Having started at Citi before “fintech” was even a word, I’ve experienced that vertical fairly thoroughly. As I was eager to explore other industries, PruVen provided the opportunity to work across five verticals. In addition, Prudential’s transformation journey and company scale offered the ability to create an exceptionally diversified portfolio compared to the venture standard. Finally, as discussed earlier, Prudential’s commitment to deeply analyzing existing venture firm models as a strategy for developing PruVen’s unique organizational structure demonstrated a progressive approach that was inherently attractive.
DI: Speaking of the five verticals, could you illuminate why they were chosen? Insurtech, fintech and enterprise tech seem obvious fits. What about healthtech and proptech?
RG: With healthtech it’s about making data accessible for multiple related industries, particularly insurance underwriting. For our industry to move from “actuarial” to “actual,” we need individual-level data from EHRs [electronic health records], pharmacy records, laboratory results, fitness tracking, etc. Platforms that enable this type of data exchange, scalably and securely, are critical for next-gen underwriting.
Proptech is key because PGIM Real Estate, the real estate investment and financing arm of Prudential’s global investment management business, is one of the largest real estate investment managers globally, with about $182.5 billion in AUM/AUA, and among largest nonbank lenders in the world. Therefore, Prudential has a very strong interest in real estate innovations.
DI: With no lack of startups in any of your five verticals, what are some of the qualifications for being a PruVen candidate company?
RG: We’re seeking black swans that are not only reimagining the status quo but also have the potential to become enduring companies. We’re strongly interested in startups with open platforms that are foundational to building ecosystems and may already be attracting ecosystem participants due to the capabilities offered.
DI: In the end, it’s all about ROI. How will PruVen’s success be measured?
RG: Fundamentally, our purpose is creating mutual value for both of our two key stakeholders – our portfolio companies and Prudential. Our success will be measure by metrics around generating new growth, product and service opportunities as well as improving customer experiences, underwriting and risk management.