The newsflow has been quieter than usual this week following the Thanksgiving weekend in the US, but that doesn’t mean there has been a lack of big stories. Tobacco maker Altria is said to be seeking an expanded footprint in the e-cigarette market through a proposed investment in Juul, which is reportedly valued at $16bn.
But one of the interesting areas of tension that is emerging is the challenge of trust and how investments in the future could bring unintended consequences. Juul was set up to help the billion smokers switch from cigarettes but has drawn attention for effectively encouraging a younger group to start vaping through different flavours.
The issue of consequences and impact is drawing attendion from the investors who back the parent companies of the largest corporate venture capital (CVC) units. Digital agency Edelman released results from its Trust Barometer Special Report: Institutional Investors, which surveyed more than 500 chief investment officers, portfolio managers, and buy-side analysts in five countries, representing firms that collectively manage over $4.5 trillion in assets.
Among the findings: 98% of respondents think public companies are urgently obligated to address one or more societal issues, with cybersecurity, income inequality, and workplace diversity being top priorities.
In a book, Corporate Venturing Survival Guide, to be published in January at the GCVI Summit by Heidi Mason and Liz Arrington at Bell Mason Group, in conjunction with Global Corporate Venturing, a series of case studies explores the different metrics and frameworks used by top CVCs to continue and develop as units mature. But the book also casts an eye over CVC’s history and maps out a potential future where the issues of risk, return and impact become increasingly important.
Also at the GCVI Summit in Monterey, California, at the end of January will be a private round table on behalf of United States Agency for International Development (USAID), with $27bn one of the world’s largest development agencies, to explore how governments and corporations together can “mobilize the power of practitioners around corporate venturing for impact”.
There is approximately $22 trillion in cash, cash equivalents and short-term investments on corporate balance sheets and while CVC remains a small fraction of these assets its power is magnified by enabling entrepreneurs to change the world. Governments have multiple responsibilities but keeping people safe while encouraging future high-(tax)-paying jobs to be in their jurisdictions remain two of the highest.
Attempting to square the circle Amgen-backed Wuxi NextCode has not only raised $200m in a series C round led by Irish sovereign wealth fund Ireland Strategic Investment Fund, but also acquired Genomics Medicine Ireland (GMI), a genomics platform backed by GV, in a deal that is expected to be worth a total of $400m once milestone payments are made. Wuxi NextCode has big plans for GMI, not least of all a genome sequencing program that will attempt to sign up 400,000 volunteers, or one in ten Irish citizens, but behind the move is the thinking from the Irish state-owned fund that improving its population’s health will bring massive benefits in reducing healthcare bills and potentially in productivity – let alone the more immediate benefits from jobs.
It is smart, strategic thinking at the highest level from Ireland’s fund but they are not alone in realizing the impact that can be made by lifting the sights from purely short-term financial ones.
