Ten weeks into my new role at Silicon Valley Bank, fresh from my tenure at Microsoft Ventures, I wanted to share a perspective from SVB. Most of you already know SVB and that we bank the majority of the best startups and venture firms, but there is perhaps less awareness of our work with corporate innovation and corporate venture groups.
Looking to the market
Activity and participation are up – from 2011 to 2013, the number of active corporate venturing units increased 29% and in the third quarter of 2013 alone corporate venturers par-ticipated in 140 deals representing $2.1bn or 30% of overall venture capital (VC) funding. Corporates participated in about 40% of the largest 100 tech deals in 2012, compared with 22% in 2009.
Traditional VC firms are more open to co-investing with corporate venturers, and founders are increasingly carving out slices of rounds for strategics. All in all, this is very encouraging.
We processed data from CB Insights, Crunchbase, Datafox and Mattermark to establish the top 20 corporate venturers from 2010 to 2013 (see graph). Intel and Google dominate with about 25% of total corporate venturing deals in that period – more than 400 deals combined. Mind-boggling.
We see Novartis, Johnson & Johnson, Pfizer and Merck in the top 20. Healthcare is big.
Companies need advice on a strategy for incubation, investment and acquisition, and real services to execute that vision. That is where SVB comes in. The industry is busy and noisy – some say frothy. The myriad flavours of innovation and investment are fascinating, and every day we learn about new ways to take best practice and connect the dots to help companies gain competitive advantage. It is all about relationships, and it is all about the data. Together, they are killer.
We are investing in this function at SVB. We are hiring Expect to hear news soon.
These days, most corporates do not apply a unilateral research and development or merger and acquisition strategy, but are carving out funds from their balance sheet to engage start ups with incubation partnerships, thematic accelerators, sandbox environments and complementary collaborations. We also see corporate venturing teams investing earlier and earlier, as the best deals are so competitive.
Our deal-sourcing and syndication advice and the value we can deliver via SVB Analytics are highly relevant in this market.
Crunching data aside, in the first quarter we have been out and about a great deal, meeting companies and seeing the trends at the Consumer Electronics Show, the Mobile World Congress and beyond.
One of the highlights so far is our Valentine’s Day lunch in San Francisco, where we brought together an eclectic group of executives from Amazon, Microsoft, Google, Alchemist, Startup Grind, Founder Institute, Andreessen Horowitz, Astia, Verizon, Ericsson, Exitround, Pearson, UpWest Labs, Qualcomm, Salesforce, Samsung, Turner, Telefónica and TechStars. Lots of collaboration ensued.
We have an event planned on April 14 with Microsoft on the topic of the internet of things (IoT) with thought leaders from Intel, Cisco, Samsung, General Electric and EMC, along with Khosla, DFJ Growth and Kleiner Perkins Caufield & Byers. It should be fun. The appetite from corporates and private VC firms to meet SVB client companies is staggering. We are sure to see IoT investments and acquisitions increase in 2014.
Next is the Corporate Innovation Summit on April 30 in Mountain View, looking at sustainable growth, strategies for larger businesses to acquire innovation and identifying the right partners. Join SVB and our peers to hear from Andreessen Horowitz, EMC Ventures, Dell Ventures, Google Ventures and more. Register at corporateinnova-tionsummit.com/cis2014/