Two bits of news from corporate venturing units we have just published continue to indicate the sector is going from strength to strength.
Firstly, we report Nielsen’s Pereg Ventures is on the verge of securing itself as a new entrant in the sector, as it eyes a $25m first close on its new fund.
The fundraising is set to cement the status of one of corporate venturing’s most high profile new entrants. It emerged Nielsen’s corporate venturing unit was looking to raise $50m last year.
If the early reception the young corporate venturing unit has received is an example, there remains huge opportunity for large companies in their sector to see the best the start-up world has to offer. Itzhak Fisher, chairman of Pereg Ventures and executive vice president of global business development at Nielsen, said: “Three to four start-ups pitch to me in a week, because in consumer, media and analytics we are the largest research company in the world. They all want to work with us.”
Nielsen’s move into the sector is one data point of many that corporates are entering venture in a big way. During the period of 2010 to 2012 there were at least 182 units formed globally, and many more new funds created from established units. We have tracked 55 formed in 2010, 72 in 2011 and 55 in 2012. This is of a total universe of 936 companies making corporate venturing-style investments, we have tracked.
Although these figures are global, the capital clout of these new entrants potentially nearly rivals much of the US venture capital industry. Silicon Valley Bank thinks there were only 170 US venture capital groups that were in two or more deals in 2011. While of course not all new corporate entrants will do two deals a year – over time, those with staying power may well do.
Corporate venturing industry practitioners are very excited about the changes. Arvind Sodhani, president of Intel Capital, the corporate venturing unit of US-based chipmaker Intel, said: “From an industry perspective, in 2012 we saw an increasing number of corporations either start their own in-house venture capital programs or dial-up existing programs. This is a promising trend for start-ups looking to raise capital from investors who bring strategic value in addition to funding, particularly as some of the pure financial VCs continue to dial-back their investments.” Sodhani was commenting, by e-mail, as Intel Capital also revealed its full year figures to Global Corporate Venturing, which is the second important update we have just published.
Intel Capital last year made 150 investments worth $353m including 64 new investments and 86 follow-on investments, including $254m in new investments. Subscribers can read the in-depth report here.
In an indication of the global shift the upsurge in corporate venturing investment of recent years could mean for venture capital, 57% of the dollars Intel Capital invested were outside North America.
With sector expertise, financial power and global expertise, it is no surprise that the current generation of corporate venturing units are turning heads at a difficult moment for the wider venture capital industry.