Corporate venturing is a “mixed blessing” to limited partners (LPs) in venture capital and private equity funds managed by independent firms (called general partners, GPs,) according to the latest predictions from alternative asset investors.
Just more than half (55%) of 110 LPs surveyed by secondaries fund manager Coller Capital, founded by Jeremy Coller, pictured, said the rapid growth of corporate venturing was “a positive development for the venture capital sector, as it boosts the wider venture ecosystem”.
Whereas 45% of LPs said it was negative for the sector, “creating unhelpful competition for purely financial investors,” Coller’s winter barometer found.
The 110 respondents included 12% from corporations or their pension plans.
Regardless of the growth of corporate venturing to more than 1,600 units (800 of which were active last year), according to Global Corporate Venturing Analytics, more then four-fifths (81%) of LPs’ forecast annual net returns from North American venture capital to be at least 11% per year for the next three to five years. Sixteen per cent of respondents expected these returns to be more than 20% in a period of negative real interest rates. Their confidence was only slightly more muted for Asia-Pacific venture, with 73% expecting returns of at least 11% per year, Coller said. Europe was third in this asset class with 61% expecting returns of at least 11% and 16% predicting returns of less than 5% per year.
Historically, Coller’s summer barometer last year had identified only about half of investors in North American venture had returned at least 11% per year from their portfolio, while only about 20% of European venture had reached this benchmark.