The GCV Symposium unpanel break-out sessions provided a popular and lively forum. Expert facilitators guided wideranging and stimulating discussions over 90 minutes at 16 packed round tables, overseen by chairman Paul Morris of UK Trade & Investment. Three facilitators were invited on to the main stage to provide 60-second snapshots of the good, the bad and the ugly from their sessions. Here are some key highlights:
Can you build a great career in corporate venturing? This unpanel was facilitated by Claudia Fan Munce of the GCV Leadership Society and New Enterprise Associates, and George Ugras of IBM Ventures. The group believed corporate venturing executives may be underestimating their true worth. In addition, the broad applicability of skills to many other senior roles in the corporation required of a corporate VC executive was highlighted. CVC roles are evolving and you need to navigate your organisations skilfully as you build great corporate venturing teams.
Corporate venturers were brought firmly back to earth during the session led by Andrew Gaule of the GCV Academy.What are the greatest mistakes that corporate VCs have made? Poor choices of investment targets risk that a corporate becomes known as a source of dumb money. It may even impact your credit rating, the group suggested. Corporate VCs were seen to be poor at pacing certain actions. They can be too quick to make personnel changes before the initial team has had the chance to make its mark, and too slow in committing to investment decisions. Transgressors will have the opportunity to up their game via a GCV webinar in the near future.
Can you hire great talent and build world-class corporate VC teams? This question was considered in the session facilitated by Dermot Hill of Intramezzo. Participants concluded that this was a question of balance. The required range of skills will not be found in one individual and should therefore be assembled across a broader balanced team. Lone wolves could offer presence in more distant geographies, but it is a challenge to integrate them fully in the team. Compensation is an important metric, though not everyone in the group believed CVCs were underpaid. The subject of carried interest (a share of investment return) never fails to make an appearance in such discussions. Only 4% of CVCs surveyed recently receive carry.
Laurel Buckner of GCI and Adrian Smith of Ignition Partners co-ordinated a lively discussion, The uneasy relationship between corporate VC investing and corporate M&A. The group agreed that for most corporations M&A is from Mars and CVC is from Venus. They have different reporting structures, mandates and focuses. Interplanetary missions were recommended whereby CVCs would understand the targets and expectations of business unit heads and other key stakeholders. Corporate VCs must be clearer on the purpose of making an investment before committing, and check regularly after investing whether the premise still holds good, including M&A ambitions.
A packed roundtable grappled with the question Can corporate VCs really be value-added investors? In a discussion led by Lisa Coca of General Electric, they warned that CVCs must deliver on commitments, manage expectations, and be visible and accountable – do rather than say. Ensure understanding and support is secured at the most senior levels internally. More should be done to help startups tap into the vast wealth of knowledge and experience within the corporate. Product roadmaps, market strategies and ecosystem support were flagged as key areas for support. The CVC can help startups develop management and leadership skills. The power of the corporate brand should be leveraged.
Neil Foster of Baker Botts helped a group of fiduciary duty enthusiasts consider the pros and cons of board participation in Board seat or observer? The group discussed differences in jurisdictions such as the US, Germany and the UK. These add to the complexity and the challenge for corporates but did not appear to be an undue source of distress for the lawyers. The unpanel group were evenly split in their preferences for full board seats over observer positions. The liability mitigation tools discussed included insurance, indemnities, best practice and take advice.
A large group of nirvana seekers huffed and puffed their way through the unpanel Can VC funds and corporate VCs live together happily ever after? facilitated by Charles Vaslet of Emerald Technology Ventures. Informal VC-CVC relationships can create value for both parties and produce potentially superior returns, noted the group. Relative VC and CVC roles in co-investments should be spelled out during due diligence. For example, CVCs should lead on supporting access to markets, VCs would be in the vanguard for governance and CEO interactions. Formal LP-GP relationships can bring value to CVCs looking to penetrate new geographies and sectors, and for those who are new and relatively inexperienced. A happy co-existence was deemed possible. For those who still harbour doubts, the GCV Academy addresses courtship and marriage options for CVCs and VCs.
Abdul Guefor of Intel Capital led an enthusiastic discussion with an interplanetary angle: Where two worlds collide: corporate VC and business development. The group agreed that a key reason to invest is to improve knowledge and understanding of new market segments. CVCs are therefore at the start point rather than the denouement. The discussion was animated and people agreed it was essential that CVCs are very clear on the reasons for making an investment. Animals appeared again, in the form of a tortoise and a hare – one represented the corporate, one the startup. Answers on a postcard not required.
The otherworldly theme continued with the unpanel Robots in corporate VC? led by Thomas Thurston of WR Hambrecht Ventures. You get what you measure, proclaimed the group during a discussion on how software and artificial intelligence can be valuable tools for corporate VCs. Tracking the accuracy of investment decision-making was considered key to improving performance. “Quant” venture capital has arrived – run with it today or run from it tomorrow, warned these harbingers of the future. The group conceded that qualitative decision-making still has a role.
David Horowitz of Touchdown Ventures facilitated the existentialist discussion Is creating strategic value really more important than generating financial returns? Delegates agreed that successful CVCs set and track key performance indicators. These are mostly strategic. There was a range of priorities among those present. Maintaining financial discipline was considered to be a high priority and financial returns were tracked and considered important. However, the reason for the existence of most of the CVCs present was considered primarily strategic. How to measure strategic value is a question that continues to challenge corporate VCs.
To what extent is investing in geographies distant from your home base a pain in the posterior? A polyglot group tackled this question for the unpanel Cross-border deals – too much time and trouble? led by Pascal Siegwart of Aster Capital. This is certainly not the case for a growing number of well-funded Asian corporates actively seeking deals in the US and Europe, according to the group, which included members from Japan, Chile, Brazil and Europe. Local incubators and accelerators are popular vehicles for a corporate to engage with local ecosystems in distant lands. Silicon Valley is not the only attractive place – it is expensive and European locations and startups are becoming more attractive for foreign investors.
Tapping data insights to improve the organisation may sound like one of the less animated roundtables. Far from it. Drew Clark of GCV Analytics led the group on a rollercoaster ride of discovery and insights that made data crunching hip. Decision-making based on imprecise data is commonplace, ineffective and a scourge that GCV Analytics seeks to eliminate. Rigid categorisation is no longer appropriate and smart, flexible tagging offers the route to salvation. Powerful analytics tools now offer not only analyses of what has gone but can also be used to help drive future investment strategy and positioning. You must know what you don’t know and ask better questions, concluded the unpanel group.
Does the venture capital ecosystem really matter for a corporate VC? Yes, was the conclusion of this unpanel guided by George Gogolev of Russian Venture Company, who provided a mass of supporting evidence. The optimum place for a corporate to enter the food chain varies. VCs and CVCs should combine capabilities, with VCs doing the early heavy-lifting and CVCs considered more adept at technology due diligence. CVCs mitigate the risk of making very-early-stage investments through syndicating with VCs. Some corporates invest in their downstream ecosystems – think Microsoft and Intel – and hope to then feed sumptuously on this. Japan has many CVCs but lacks entrepreneurs and an ecosystem to support them. Israel benefits from support from the Office of the Chief Scientist. Can non-tech companies such as those in fashion build a regional ecosystem? The group concluded that CVCs should not attempt to economise on headcount, should increase global presence, and must help local startups around the world to globalise.
Risk mitigation in pre and post-portfolio management: methodologies, insights and best practices did not win the unpanel title that trips most easily off the tongue prize. However, under the experienced guidance of facilitator Michael Fox, GCV Silicon Valley emissary and MIT venture mentor, it proved to be a highly popular session marked by animated discussion. Drowning in dealflow was seen as a real risk – one that could be mitigated with external help from bright young things. Focus could be improved by a menu-driven approach. Use the parent corporation as a sounding board to check progress regularly against milestones. Measure success via tangible benefits, including internal deployment of the startup’s technology. Be aware of reputation risk when you allow your corporate brand to be publicly associated with a startup. Consider monetising stranded asset IP value through spinouts.
The unpanel Should corporate VCs care about impact investing? was led by Jimmy Rosen of the Bill & Melinda Gates Foundation. A committed and thoughtful group concluded that corporates should indeed care. A key challenge is how to measure impact. Profit and impact are not mutually exclusive. Impact was considered to provide a sense of purpose to employees resulting in increased performance. Employee satisfaction should be measured. The law firm pro bono model was considered to be a good proxy for attracting the brightest talent to impact-related work. Today’s impact opportunities are tomorrow’s big market winners – ignore them at your peril.
Arnaud Bonzom of 500 Startups led a fast-moving unpanel Do corporate VCs need to press the accelerator? Get the pedal to the metal was a clear group consensus. Criteria by which to identify the best accelerators were discussed, including sector specification, reputation for quality and volume. Specialised niche accelerators may be more suitable than larger brand names for some corporates. Mentoring from people within the corporate or appointed by the CVC was considered important to improving the quality of accelerator management. Corporates can engage with accelerators as sponsors, mentors or as limited partners. Accelerator companies tend to focus more on B2C than on B2B. u