In preparation for the Global Corporate Venturing Synergize conference in New York last month, Touchdown Ventures, the manager of more than a dozen corporate venturing programs, asked GCV Leadership Society members to rank their most important current issues.
This list was then used to prioritise the agenda of the conference and assemble case studies to address those challenges. At the top of that list was “articulating strategic value to senior executives at the corporation”.
BP’s measure of strategic value is cash generated by portfolio companies, as reported by the business units. Meghan Sharp explained that some of those, the so-called wildcats in “Horizon 3” that form around 10% of BP’s investments, could take as long as 10 years to become commercial and so may not yet generate cash, but that is accepted. Next year BP plans to double its venture investments to $200m a year.
Reese Schroeder, head of food producer Tyson Foods’ venture unit and formerly head of Motorola Solutions Venture Capital, said his strategic measure was the level of collaboration between the business and the portfolio companies.
Ulrich Quay, head of BMW i Ventures, the venture unit of car maker BMW, believes in the value of telling success stories. And while BMW i Ventures does not ask for permission from business units to make investments, they are consulted. He said: “We don’t just throw things over the fence. If we did that, they wouldn’t buy in.”
The second and third most important challenges revealed by the survey were “executing commercial relationships with startups” and “adding value to portfolio companies”. Bharat Rajaram, head of ventures at insurance company Aflac, said Aflac has commercial relationships with six of the 11 companies in its portfolio, since investment started in early 2017.
Intel Capital, the corporate venturing unit of the semiconductor manufacturer, helps its portfolio companies by holding customer days where the firm introduces selected portfolio companies to Intel customers who face specific technology challenges.
The conference was opened by David Horowitz, co-founder and managing director of Touchdown Ventures, who set the scene with his opening remarks. His presentation included some findings from research Touchdown conducted in 2017 that indicates that US public companies with a venture capital practice grew their stock prices faster than their listing index.
Horowitz was followed by Darcy Frisch, co-chairwoman of GCV Synergize and a 19-year veteran of media company Hearst’s venture unit, who has seen several economic cycles. In a fireside chat with Ian Goldstein, partner at law firm Fenwick & West, she explained that a downturn was the best time to invest as “the good will survive and valuations are lower”.
Scott Lenet, a co-founder and president of Touchdown Ventures, summarised each session, including using the Japanese poetry format of haiku. For example, the following was written by him on the fly as part of his summary of Ulrich Quay’s talk:
It would be stupid
To neglect business units
During diligence
GCV coordinated two events the day before GCV Synergize, both at the new offices of Fenwick & West in mid-town Manhattan. A Women in Venture lunch, hosted by Fenwick & West and supported by Silicon Valley Bank was followed by a meeting of the GCV Leadership Society which explored new ways to help the community.