In 2014, Tony Cannestra, previously of Strategic Venture Partners and Ignite Group, took on a new role as director of corporate ventures at US-based automobile parts manufacturer Denso.
His first job was to establish a venture investment strategy for Denso, building relationships with entrepreneurs, universities, accelerators, incubators, angel investor groups and venture capital funds. The strategy is to identify early-stage startup companies that are a good match to Denso’s strategic growth plan, “and then create a means to support those companies through both equity investments and non-equity funding”, as well as mergers and acquisitions.
It is a project he has accomplished with aplomb. He said: “In my three and a half years as the leader of the CVC group at Denso, the company has made five direct investments in startup companies, [including most recently Peloton Technology’s $60m series B round], two direct investments in VC partnerships, and three ongoing sponsorship agreements with incubators or accelerators.
“Since mid January of this year, I have completed two follow-on investments to our existing portfolio companies, and I have received approval to close five new investments, in four of which we are the lead investor, so I had to negotiate the term sheets.
“[Last month] I was asked to help lead a team to engage in a significant acquisition opportunity.”
In an interview for GCV’s mobility sector report published in January, Cannestra said: “The startups are typically of strategic interest to Denso [in three areas – connectivity, autonomous vehicles and cybersecurity]. We invest in the stages from seed to series B. Most of the opportunities we look at are mission-critical to the automobile. Because of the importance of those systems, we tend to take a longer-term perspective on when those technologies can be implemented in an automobile. You cannot do what we do in a one or two-year window. And we are investing for strategic rather than financial returns.
“We invest off the balance sheet. This means that we are not limited by the number of investments we can make annually, and it keeps everyone engaged at the R&D level and at the upper management level, since they have to be informed and sign off on every investment.
“In my previous work in venturing, I observed that corporate venturing is not successful unless you really add value to the whole ecosystem. So when I helped create the Denso CVC group in Silicon Valley [California] several years ago, we made a conscious decision to support entrepreneurs at the earliest stages, to work with other venture funds as a limited partner and as a co-investor, as well as leading direct investments.
“So as part of that investment strategy, we sponsor the incubators Prospect Silicon Valley in San Jose, Lemnos Labs in San Francisco and NextEnergy in Detroit. We were the anchor investor in Autotech Ventures and we have made five direct investments in startup companies.”
Before taking the role at Denso, Cannestra spent five years as managing partner of venture capital firm Strategic Venture Partners, where he focused on corporate investors as limited partners. Before that, he was a principal and later an executive vice-president of fund manager Ignite and a board member of energy storage company Cymbet Corporation.