Citigroup's venture capital arm has invested in Second Measure, a company whose technology processes and analyzes billions of card transactions from millions of U.S. households to answer questions about consumer behavior.
The bank would not divulge how much it is investing, but it is part of a $20 million Series A funding round co-led by Bessemer Venture Partners and Goldman Sachs. (Earlier investors have included Jefferies Financial Group, Norwest Venture Partners, Shasta Ventures, Foundation Capital and Y Combinator.) Second Measure has now received $25.5 million in total funding.
Citi’s participation is a different approach than some institutions have taken. Where some large banks play fintechs for their own advantage, sometimes controlling them to prevent them from becoming successful competitors or co-opting their ideas, Citi Ventures appears to more interested in supporting the firms in which it invests.
In this case, Second Measure is not a fledgling startup, but a fairly established company with many customers. Greylock Partners, Neuberger Berman, Domino’s and Spotify use the technology to help with decision-making. Media outlets including Bloomberg, CNBC, Recode, and The Wall Street Journal use Second Measure’s data in their reporting. Hedge funds and investment managers use Second Measure it to assess companies’ performance and to spot consumer trends they might want to bet on.
Citi is having discussions about potentially using Second Measure’s technology internally in a few different areas.
Several companies already provide the ability to mine card spending data, but Citi was looking for something different.
“We’ve talked to all or most of them,” said Luis Valdich, managing director of venture investing at Citi Ventures. “What we found exciting and compelling about Second Measure was the technology. The team has a strong technology and data science background and they have architected the solution in a way that is nimble and flexible and that unlocks far more use case cases than those that have been typically associated with these types of data sources.”
Second Measure’s website says, “Every day, we ingest and analyze purchases from millions of anonymized U.S. shoppers to provide a clear and accurate view into any consumer company.”
Users of the platform can see how consumers are spending their money within specific geographies and how brands are competing for consumers’ business.
But while analyzing credit card transaction data can and does raise privacy issues, in Second Measure's case, the data is aggregated as well as anonymized, so it’s impossible to track any individual’s shopping patterns, according to Valdich.
“What you will see is overall trends in spend in, say, Starbucks in certain geographies,” he said. “And you could see folks that were spending at Starbucks were more likely to also eat at Chipotle.”
Second Measure has a bright future because companies are just getting started analyzing consumer transaction data for all kinds of purposes, Valdich said.
