Telstra Ventures, the corporate venturing unit of the Australia-based telecoms company, deploys a two-pronged global strategy.
At the GCV Symposium in London in 2015, Matthew Koertge, managing director of Telstra Ventures, said: “We are looking for opportunities to expand Telstra’s core business, predominantly into Asia. And we are trying to find the world’s best solutions to apply in Australia.”
This work has been going well. For last year’s GCV Powerlist award, Koertge said: “Telstra Ventures continues to make solid progress. We have recently closed our 38th investment since we started five [now six] years ago. We have now achieved seven liquidity events, and we have expanded our team to 20.”
At the end of 2016, Telstra Ventures provided its vision for the future of the corporate venturing in a report – Strategic Growth Investing: The Next Evolution of Corporate Venture Capital.
GCV’s Leadership Society tracks about 1,000 active CVC units, and Telstra Ventures’ report predicts that by 2025 corporate investors will be responsible for around 35% of the total venture capital provided globally, up from 28% today.
The report suggests that corporate venturers will increasingly become segmented into three distinct types – small teams that take part in two to five deals a year, investing up to $2m each time, more established units that put more financial and human resources into the process, and strategic investment groups that make up part of their parent company’s long-term strategic plans.
The third group, identified by the report as “strategic growth investors”, typically invest at least $50m a year in deals aligned to their parent’s core business as part of a long-term commitment, and seek to provide commercial value as well as a return on investment. Strategic growth investors have the potential to be extremely beneficial for corporates and portfolio companies as long as they maintain access to the capital required for lengthy commitments to companies, and are given ample space and incentives to add commercial value to their deals.
It is in this category that Telstra, which has also been exploring how artificial intelligence can help its own dealflow, has increasingly focused. This year alone, China-based robotics technology producer UBtech Robotics raised $820m in a series C round led by internet company Tencent and including Telstra, as well as consumer electronics maker Haier Group, furniture rental service Easyhome Furnishings, conglomerate Chia Tai Group, power producer China General Nuclear and online lending platform CreditEase.
Other deals included BigCommerce, a US-based e-commerce software provider that completed a $64m round led by investment banking firm Goldman Sachs’ Private Capital Investing unit after Telstra Ventures had backed the series D round, US-based cyber threat detection software producer Anomali’s $40m series D round and Cumulus Networks’ $43m D round.
On exits, Telstra was a shareholder in US-based digital signature technology provider DocuSign, which posted a $629m initial public offering at a market capitalisation of more than $4.4bn.
Koertge was formerly a general partner at Accede Capital Venture Partners, having previously spent more than eight years in banks’ investment teams, at Macquarie and Deutsche Bank, and earlier as a project manager at Fujitsu’s telecoms products group.