Looking at the successes of some corporate venturing units, it is hard to see quite how and why some venture capitalists find it such hard work.
Therefore, with two more planned flotations for its three-year-old programme, Jeff Lipton (pictured), vice-president of venture and strategic investments at computer network equipment company Juniper Networks, could be forgiven for feeling a trifle pleased with his performance as effectively a one-man corporate venturing unit.
With a third of his 27 investments already exited, Juniper is looking forward to portfolio companies Violin Memory, a US-based maker of data storage equipment also backed by Japan-based conglomerate Toshiba, and FireEye’s, a US-based provider of cyber attack protection, initial public offerings (IPOs). Both Violin and FireEye are planning to raise about $175m in their flotations expected to give them multi-billion-dollar market capitalisations – this week’s Big Deal(s).
Their IPOs would add to Juniper’s previous public market exit for a portfolio company: Cyan, which listed on Nasdaq stock market.
Juniper’s other corporate venturing exits have included McAfee buying Sentrigo in 2011, Akamai buying Cotendo and three purchases by the parent: Alto, Ankeena and Contrail systems.
Lipton manages two corporate venturing programmes, the Junos Innovation Fund for early and growth-stage software companies that expand the ecosystem for the parent’s Junos operating system and Juniper Strategic Investments for hardware and component and special situations where the investment helps its parent’s business.
While the latter has a more strategic focus, as the name implies, both sets of deals are expected to deliver strategic and financial returns. Understanding how Juniper’s separate mergers and acquisitions team could look through his portfolio companies to drive this strategic value is helpful, Lipton said, even if portfolio companies understand only about 10% of deals are likely to end in such an exit to Juniper itself.
Lipton puts part of its early success rate down to sourcing about 80% of its deals from Juniper and its customers but part of the learning curve for both parent and entrepreneurs has been about how the large company can work with start-ups – a fact aided by Juniper’s own founder still remaining involved.
That Juniper and the enterprise IT sector has remained in demand over the past year also augers well for its other portfolio companies, such as Vidyo, CloudScaling, Illumio and Apigee, especially as the public markets have been opening up as an exit route.
News provider Fortune columnist Dan Primack, in a piece entitled Don’t sweat the IPO boom, said: “A lot of companies have gone public this year. More than 140 at last count [already topping the whole of 2012’s total in the US]. Don’t panic.”
He added: “IPO volume in 2013 has arguably been aided by last year’s bipartisan JOBS Act, which has resulted in more than 250 ‘confidential’ registrations with the SEC [Securities and Exchange Commission, the US regulator].”
And more are on the way. Flash memory provider Pure Storage last week said it had raised $150m from “pre-IPO” investors at a valuation of more than $1bn – itself a Big Deal.