Nesta celebrates Featurespace’s path from university spinout to global AI player
www.nesta.org.uk/project-updates/nesta-celebrates-featurespaces-path-from-university-spinout-to-global-ai-player/
www.nesta.org.uk/project-updates/nesta-celebrates-featurespaces-path-from-university-spinout-to-global-ai-player/
Featurespace’s award-winning machine learning solutions fight fraud and financial crime across the globe. It has now completed its sale to Visa Inc.
Nesta, established to back UK innovation, is proud to have been the first institutional investor in the company when we invested in 2010. Nesta has continued to support the company through its scale up to its strategic sale to Visa Inc. Driven to make the world a safer place to transact, the company has over 80 direct customers, including some of the largest global financial services retailers. It has supported 100,000 businesses with safer banking. Nesta was joined through the scale-up years by major investors, including Chrysalis Investments, Highland Europe, IP Group plc, Insight Partners, MissionOG and TTV capital.
Nesta’s early investment strategy was to support the case for early-stage equity investment in UK technology companies. Featurespace fit this profile as a university spinout building on their research which used machine learning to drive its adaptive behavioural analytics software. The company experimented with a variety of use cases. Nesta supported the company through this process until it landed on the most promising commercial application of the IP, which ultimately involved productising real-time financial fraud detection. Now a global leader in artificial intelligence for financial services, Featurespace remains a pioneer in using machine learning to apply adaptive behavioural analytics and spot anomalies in financial transactions, which has been its focus since 2014.
The role Nesta has played over the years as an investor in Featurespace reflects some key aspects of how Nesta’s current investment team supports the businesses we back.
Nesta led the first institutional funding round in 2010, taking technology and commercial risks that others were not prepared to take. Nesta welcomed successive rounds of institutional investors who were able to provide the necessary support at different stages of the company’s growth trajectory.
Nesta helped bring in some key investors at critical moments, who brought specialist expertise needed by the company, such as Imperial Innovations (now IP Group) who have deeper pockets than Nesta, and co-invested with notable angels, including Mike Lynch (Autonomy founder and ex Nesta Investment Committee member).
Nesta influenced the restructuring of the senior management team, helping to secure a commercially experienced CEO, Martina King, who continued to lead the company through to its sale. We have worked with founder Dave Excell from the start, supporting his transition to the chief technology officer role, in which he was able to accelerate the development of the company’s market-leading fraud detection solution. Nesta encouraged the company to establish its US business, a critical part of their growth and success.
Nesta has invested over five funding rounds as the company has raised >£100 million from specialist fintech investors and highly regarded growth investors, including Highland Europe and Insight Partners.
Nesta’s direct investment arm, now Nesta Impact Investments, currently makes venture investments aligned to Nesta’s strategic priorities in health, education and sustainability.
Dave Excell, founder of Featurespace, said: ‘Throughout our journey, Nesta's investment team has consistently provided the right mix of support and challenge for the critical decisions we have made. From an entrepreneur's perspective, the involvement of Nesta's investment team with Featurespace underscores the critical role of early-stage investment in enabling the growth of innovation in the UK. Your support and guidance have been crucial in shaping our journey from a consulting firm to a global market leader in software-based services for the financial industry.’
Lisa Barclay, executive director of Nesta Impact Investments, said: “We are delighted to see the sale of Featurespace to Visa, which provides a platform for global scale and safer financial transactions for millions of people and businesses. Nesta’s experience with Featurespace, investing in a promising innovation early on, taking early-stage risk that other institutions are not ready for and supporting the founder and management to find the right route to commercial scale reflect our ongoing ambition as an investor in early-stage tech ventures.”
Alex Hook, senior investment director and Featurespace board observer, said: “It has been a genuine pleasure to see Featurespace grow from a consulting business into a world leading financial fraud solution company. Stewarded superbly by Martina King, Featurespace proves that leading technology can be commercialised and scaled in the UK, which I’m pleased to say will continue to be the case under Visa’s ownership. Having first invested in 2010, we are thrilled that our 14-year relationship with the company has generated such a positive outcome for all shareholders, as well as making the world a safer place to transact.”
