Welcome to the first issue of 2011. And what an interesting year it promises to be, with the inaugural Global Corporate Venturing seminar and awards ceremony in mid-May to gauge the sentiment and talking points as well as celebrate the industry’s achievements.
That the industry has so much to celebrate will come as a surprise to at least a few people whose attention has been focused on the travails of the independent venture capital (VC) industry in the US and Europe.
While their attention has been caught by declining fund-raising, loss of talent and an overhang of troubled deals within VCs, the corporate venturing community has been learning the lessons of the dot.com implosion over the past decade and delivering both financiallyand strategically to their sponsors.
A strong, publicly proactive corporate venturing community that maintains its spirit of collaboration with others is vital for entrepreneurs and building investment syndicates with independent VCs.
The different types of venture investors, whether angel, corporate, independent or government-funded, can be complementary. The only difference between these parties is often between value-added investors and those that are not.
But all sides bring different remits and one of the biggest challenges facing corporate venturing is understanding how government’s role as limited partners in independent funds or directly investing in syndicates or deals will shape companies.
To this end, a look at South Korea (this month’s innovative region) with its technology focus and strong state support for venture investing could be a foretaste for other markets.
Large corporations are often adept at handling the regulatory and public pressures their activities generate and these skills could be an extra fillipfor nascent businesses if developed.
And while more VCs limit themselves geo-graphically and in their sector focus, corporate venturing units can use their parents’ existing branches or research and development officesto tap into a global network and expand.
Intel Capital has done this successfully over the past 20 years, and General Motors plans to do so, too, according to its GM Ventures president (see profile).
Too often, however, the industry has shot itself in the foot with shifts in corporate direction affecting well-regarded corporate venturing teams, as in the winding up of Logispring by logistics company TNT in the other of this month’s profiles (see profile).
Other dangers lurk for corporate venturers, especially in emerging markets as buoyant stock markets in Asia encourage short-termist expectations of venturing units.
Further dangers and opportunities, such as the fear of a double-dip recession or hope England can carry on winning at cricket, for the year can be found in the special outlook (see analysis).
But overall, and certainly when compared with the same time last year, the economic forecast is more optimistic and predicted gross domestic product growth is a primary indicator of increased venture investing over the next few years.
Last year there was a gradual recovery in corporate and investor spirits. As stock indices rose, debt markets also coped with the troubles in Ireland and Greece and kicked the can of household and high-yield corporate borrowing further down the road to deal with another day (or year). Eventually, however, the owners of the debt will call to col-lect both the interest and the principal borrowed.
This period of grace to use the free cashflowscurrently being given to innovate and reorganise in order to deliver future profitsand higher earnings is being taken. Last year’s surge in corporate venturing units being set up or reinvigorated was often part of a wider business development and innovation programme.
It is this awareness of the challenges ahead and what is required that is the most positive aspect to the start of 2011. This is now the time to deliver on the promises made.