Corporate venturing should be, and often is, thriving in these conditions with a record number of groups doing their first deal last year and the top 20% increasing their activity and in some cases, such as Tencent, effectively investing almost all their free cashflow into minority deals.
After all, corporate-backed venture exits broadly equalled investments last year for the first time, according to the annual review, World of Corporate Venturing.
Even SoftBank has turned around as we argued it would during the dog days of May last year and has just hired a world-class managing partner in Nagraj Kashyap, head of Microsoft’s M12 Ventures.
The future is bright, too. After about a five-fold increase in deals from about $260bn-$300bn invested 2001 to end-2010 to about $1.8 trillion invested 2011 to end-2020, according to Pitchbook and NVCA figures, it will be interesting to see how the industry handles a potential 10-times jump this decade in assets.
So, why did a record number of corporations stop investing last year?
Management changes, internal politics, not-invented-here antibodies, financial pressures on corporate cashflows and balance sheets, tensions between long-time horizon investing and business unit and C-suite strategy, and a host of others still bedevil the community.
Corporate venturing leaders with scars on their backs know how to manage these concerns and spend at least half their time managing internal fires and stakeholders even if this means leaving less time for building a team and investing in startups that will be relevant in the future for both financial and strategic reasons.
The most powerful tool, however, remains the use of mimetic desire. Being able to point to a peer senior managers respect doing corporate venturing successfully is a powerful argument, just as it was when Claudia Fan Munce at IBM was able to do in referencing Dan’l Lewin at Microsoft after the dot.com crash after 2001.
But referencing is just a start. The community has been collaborative and supportive to new personnel within experienced units as well as the 800 or so newer units doing their first deal last year.
The sharing at the Global Corporate Venturing events and Connect powered by Proseeder digital tool drives the dealmaking and community and the mentoring and learning now happens throughout the year through the GCV Institute, our new professional development program launched last month. The webinar today will update the community on the planned courses for how corporate leaders can understand why and how best to use the corporate venturing tools as well as train up the CVCs and help land the value back into the parent. My thanks to Liz Arrington, Patty Burke and James Gunnell for leading the webinar and to all the Institute’s advisers and mentors for showing where the proverbial puck is heading and helping us all skate there beforehand.
