Citibank is spinning out Proxymity, a digital communications platform for investors that was grown out of Citi Ventures’ internal innovation pipeline D10X. Proxymity also received $20.5 million in funding from eight investors who will nominate board members to help lead the company: BNY Mellon, Citi, Clearstream, Computershare, Deutsche Bank, HSBC, J.P. Morgan and State Street. 

Proxymity connects institutional investors with their portfolio companies so they can vote on company decisions in real time, eliminating intermediaries that can cause errors, delays and higher costs. The company is the latest in Citi’s efforts to create a strong internal innovation culture that pulls from all areas of the bank. 

“There are service providers active today in this space, but in general all they do is solve one leg of the journey,” said Jonathan Smalley, who will serve as chief operating officer of Proxymity. “Our vision behind Proxymity from the beginning, and what won the support of Citi, was the vision to solve this for the entire chain.”  

According to Proxymity, the average investor vote goes through seven intermediaries before reaching the company, creating a troubling game of telephone for important votes. The real-time, digital platform also gives investors until the market deadline to vote, instead of days in advance to account for intermediate steps. Dean Little, who will serve as Proxymity’s CEO, said the current voting process often involves faxes and paper mail, and the movement of votes across different markets can cause errors.  

Proxymity’s platform creates a digital meeting and registration where investors can vote in real time. Developed in 2017 and launched in the U.K. in 2018, the platform has so far supported more than 3,000 shareholder meetings, according to the company. Proxymity is available in the U.K., Germany, The Netherlands, Belgium, Austria and Australia, and is piloting in Spain. 

Little has worked at Citi for almost 14 years, and Smalley worked at the bank for almost 10 years before spinning off Proxymity. They both worked on product development for the bank’s asset servicing division, and their work trying to improve proxy voting for Citi and its clients led to the foundation of Proxymity. Smalley said one of his first jobs at the bank was opening the proxy voting mail. After discussing the idea toward the end of 2016 with management, the two were directed toward the D10X program and gave a seven-minute “Shark Tank”-style pitch to senior leaders. After gaining their initial funding, Smalley and Little continued to go through internal pitches with D10X to obtain funding from Citi for their idea.  

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In addition to Proxymity, Citi’s D10X program has developed Beacon by Citi, a budgeting app, as well as CitiConnect, a payment processing and reconciliation tool. Citi Ventures, the bank’s venture capital arm, also invests in outside companies, and its portfolio includes big names like Betterment, BlueVine and Plaid. 

Each Proxymity investor will get one board member to help guide the company, but Smalley and Little will run the daily operations. The platform makes money from fees charged to service providers. The company aims to expand through Europe and into North America in the future. 

“Our vision initially was to create this digital platform,” Little said. “There’s a huge number of opportunities in the investor communications space.”