Corporate venture investing strategies have evolved considerably in the last few years — they have expanded, become more global and gone from simply investing in individual startups to creating ecosystems.
“CVCs are now present across the globe and this was not the case some years ago,” said Gary Dushnitsky, associate professor of strategy and entrepreneurship at London Business School.
Dushnitsky said there had been a noticeable evolution in their strategies from looking for cutting-edge technologies to trying to create ecosystems. Relationships between traditional and corporate VCs have also evolved: “In the olden days, corporates would be asking how to get into a syndicate with VCs and now it is the other way around. You have VCs looking to get into a syndicate with CVCs.”
Saint-Gobain has been a good example of how much strategies have evolved. Venturing activities first started in 2006 with indirect investing by LP commitments in funds, but after the global financial crisis the company gradually started gradually to look more actively for partnerships Claude-Sebastien Lerbourg, external ventures manager for Europe at Saint-Gobain’s venturing subsidiary Nova told the GCV Symposium.
After 2015 Saint-Gobain started to participate in minority stake deals in a systematic way, aiming to invest €3m or less in cases of mutual strategic interest with a startup. Nova now has a portfolio of more than 30 portfolio companies.
Similarly, Andrew Murray, global head of strategic and fintech investments at bank and financial services firm Citi, said tht back had seen a growing need to source external innovation, helping both business units and clients to adopt new technologies and solve problems.
SC Ventures, the venturing arm of Standard Chartered, meanwhile, has taken the broadest approach, with activities in accelerators, CVC investing and venture building. Gurdeep Singh Kohli, head of SC Ventures, said the focus at the unit had shifted from transforming the bank and investing only in startups Standard Chartered would work with to transforming banking as a whole. It is not only building ventures for Standard Chartered but building hem for clients and other banks as well.
One inevitable question was: how well will these expanded strategies stand up in a potential extended period of stagflation and rising energy costs. Murray conceded that some risk factors have become more acute and there is a question mark around exits for later stage companies at the moment. But one solution, Kohli said, was to diversify. The game plan for SC Ventures revolves around forming more partnerships and widening the scope of portfolios in order to de-risk them.
