The end of the 2010s is no exception. Just like a person, the teenage years in any industry are a time for transformation and growth.
For corporate venturing, the potential for the industry to more fully adapt to a professional, well-funded ecosystem of support for entrepreneurs as well as delivering financial and strategic value to their parents has been realised.
But more is possible. It is clear, as economist Paul Romer pointed out in his seminal 1990 paper that the search for new ideas by profit-maximising entrepreneurs and researchers is at the heart of economic growth.
Effectively, as Charles Jones at Stanford University summarised, ideas are non-rival: as more and more people use the Pythagorean theorem or the Java programming language or even the design of the latest iPhone, there is not less of the idea to go around.
Ideas are not depleted by use, and it is technologically feasible for any number of people to use an idea simultaneously once it has been invented.
This, combined with Henry Chesbrough’s first book, Open Innovation, in 2003, helped open up inward-looking institutions and corporations to the talent outside their walls and provided crucial academic marking points to why venture investing could be helpful as part of a wider innovation toolkit.
Mass dissemination, however, requires the technology to spread ideas, such as the internet and mobile devices effectively available to more than four billion people by October, according to Statista.
Role models are then required, to show how to do this well. Here, leaders such as Intel Capital, Naspers (and its spinoff Prosus), Samsung and Tencent are important because – all entrepreneurs and investors know – execution counts for far more than an idea.
The 2010s have seen an idea meet its time. More than half of the world’s top corporations and more than 3,000 in total, are actively venture investing. More than $1 trillion of innovation capital has been provided to entrepreneurs this decade – more than other decades combined.
The question is whether overconfidence will lead to a plateau or exogenous shocks, such as trade wars and protectionism, will limit opportunities. On the former, the challenges in some of SoftBank’s portfolio from its near-$100bn Vision Fund, such as the pulled flotation of co-working provider We Company or the ambitious valuations for ride-sharing service Uber, are clear.
The longer term vision on technology may be correct but creating multiple funds without an established team to manage such an enormous vehicle is a recipe for the occasional, high-profile slip-up.
Out of financial bubbles driven by cheap money, however, comes the infrastructure for further growth. Less clarity, however, remains about the world’s desire for change and protectionism has reared its head again.
Next month’s issue and our World of Corporate Venturing review published at the Global Corporate Venturing and Innovation Summit in Monterey, California will have more on the path ahead but the seeds have been sown. Corporations can buy, build or partner and invest their way to growth. Doing it well often requires removing internal obstacles to doing so, whether financial or administrative, as well as creating the esprit de corps to encourage people to work together to make the world a better place.
To enable the people with the right ethics, aptitude and attitude to enter the, therefore, and find an organisational structure and capital to support their work, becomes the differentiator. For the talent to flow into where their skills can do the most good, the industy needs unbiased gatekeepers – perhaps through a common certificate agreed by an institute. That talent can then efficiently allocate capital to the entrepreneurs changing the world.
A decade of progress indeed is ending on a high.
