By all accounts, corporate venturing (CVC) has done very well in the second quarter of 2013. A report from data providers CB Insights has announced that CVC activity jumped 23% year-over-year in Q2 2013, while a report from accountants PricewaterhouseCoopers and the US-based National Venture Capital Association (based on underlying data from media group Thomson Reuters) has shown that the percentage of CVC dollars within the totality of venture capital (VC) investments was 13.7%, its highest quarterly level since at least the credit crunch.
Any excitement needs a little tempering – please see last month’s Global Corporate Venturing magazine for more of our proprietary data and analysis or the tables are here.
The CVC/VC ratio does of course consist of two moving parts. Year-on-year, CVC supplied a little more capital and VC, as a whole, slightly less capital in Q2 2013, compared to Q2 2012. In other words, according to the National Venture Capital Association (NVCA) data, in the second quarter of 2013 there were 914 VC deals (worth $6,726.9m), of which 145 ($909.2m) included CVC, a proportion of 13.7%, which can be compared to Q2 2012, when there were 971 VC deals (worth $7,354.6m), of which 153 ($572.3m) included CVC, a proportion of 7.8%.
These Q2 2012 and Q2 2013 quarterly levels of CVC and VC investment activity sit comfortably within the range seen on the NVCA’s spreadsheets. Total amounts of quarterly venture capital investments since the beginning of 2007 hit a low of $3,840.4m in Q1 2009 (wallowing in the wake of the financial crisis of late 2008) and a high of $8,450.3m in Q4 2007 (when the credit crunch had yet transmute into the financial crisis). Of these VC totals, CVC has accounted for somewhere between a low of 5.5% (Q3 2009) and now its proportional highest of 13.5% (Q2 2013). Overall, for all the quarterly fluctuations, investment flows have been comparatively steady since 2000 – the top of the dotcom bubble – when an annual total of $105,121.6m of VC money was invested, of which corporate VCs supplied $15,196.7m, or 14.5%.
CB Insights has somewhat different data from the NVCA: where the NVCA saw corporate VCs involved in 145 deals making a total CVC investment of $909.2m in Q2 2013, CB Insights registered 126 deals involving CVCs, who invested $1.7bn. Also, year-over-year (the rolling measure cited in CB Insights’ report headline) is not the same as year-on-year, the more typical comparison. Looking more closely at CB Insights data, there was in fact a drop in the total amount of CVC investment in Q2 2013 ($1.7bn), compared year-on-year to Q2 2012 ($2.1bn). However, there were more CVC-involved deals in Q2 2013 (126 deals) compared to Q2 2012 (117), albeit fewer deals than in the last quarter, Q1 2013 (131 deals).
Still, whatever the strength of the CVC investment surge (and it has risen, year-over-year) CB Insights argues that because 25% of overall VC funding now includes participation by CVCs, and given that traditional VCs are having a tough time raising money from LPs, it would appear that corporate VCs are stepping in to fill the gap.