Corporate venturing units are becoming more positive about investing this year, although the range of things they worry or are optimistic about is diverse.
A snapshot survey on behalf of the US-based trade body National Venture Capital Association (NVCA), which was conducted by the Center for Private Equity and Entrepreneurship at the Tuck School of Business (pictured) at Dartmouth University in October, found 10 of the 19 respondents* said they expected to increase the amount of capital invested by more than 20% over the next two years. (*26 respondents completed the survey but not all answered every question.)
However, only nine said they would increase the number of deals by more than a fifth in this time, while 40% planned to be the lead investor in significantly more deals in the next two years.
The confidene was also spreading to companies yet to launch a corporate venturing unit formally. A third of respondents to the survey said corporate venturing was becoming standard at Fortune 500 companies – the biggest listed companies in the US – as a source of strategic and/or financial value, while nearly the same number said there would be a merger of corporate venturing and the broader innovation team, similar to integration at US bank Citigroup and insurer Hartford.
The remainder said there would be little expansion in the number of corporate venturing groups but those that remained would have more capital and influence.
The biggest issues facing corporate venturing units for the next few years remained gaining or maintaining the parent’s financial and operational support and communicating their sustainable long-term value creation, the survey found.
After these two main hurdles, the other issues included balancing financial and strategic returns, retaining employees and paying them, and learning how to co-invest and leverage insights from their dealflow for the parent. Similar to US venture capital firms, corporate venturing units said the US would be the most promising country or region for the next few years, followed by China.
Which is the most promising geographic region/country for the next several years?
US 52%
China 22%
Brazil 9%
India 9%
Israel 4%
Source: National Venture Capital Association, Tuck School of Business