By Anna Irrera
(Reuters) - Northwestern Mutual Life Insurance Co [NMLIC.UL] has set up a $50 million corporate venture fund to invest in fintech startups, in a bid to expand its digital offering and capabilities.
The initiative makes Northwestern Mutual the latest established financial institution to set up a venture arm dedicated to backing fintech companies, as large firms seek to keep up with a wave of digital transformation impacting their sector.
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The company said on Thursday that Northwestern Mutual Future Ventures will invest between $500,000 and $3 million in technology-led companies that provide services which help consumers achieve financial security.
Specifically, the fund will back young companies focused on digital health services, analytics, changing consumer preferences and innovative client experience, it said.
The launch of the venture arm builds on from Northwestern Mutual's acquisition of financial information and advisory website LearnVest.com in 2015, said Rebecca Porter, vice president of corporate strategy at Northwestern Mutual and chairwoman of the investment committee for the new fund.
"We want to continue that momentum and continue to invest in startup companies," Porter told Reuters. "We are looking for innovative companies that are going to address clients' need in a new way."
Northwestern Mutual is also an investor in New York-based robo-advice firm Betterment and Rize, a startup that provides digital tools to help consumers save.
Investments from corporate venture arms constitute an increasingly significant share of venture funding for fintech startups. In the third quarter of 2016, corporates participated in 30 percent of global VC-backed fintech deals for the second consecutive quarter, according to a report from data provider CB Insights and KPMG.
Financial institutions with active fintech venture arms include Banco Santander <SAN.MC>, Citigroup Inc <C.N>, Banco Bilbao Vizcaya Argentaria (BBVA) <BBVA.MC>, Axa Sa <AXAF.PA>, Allianz Se <ALVG.DE> and Aviva Plc <AV.L>.
Northwestern Mutual's new venture fund also comes at a time when investment activity into early-stage insurance technology companies is growing. Early-stage insurance tech companies raised $508 million in 2016, up 56 percent from the previous year, according to CB Insights.
(Reporting by Anna Irrera; Editing by Biju Dwarakanath)