A favourite metaphor of corporate venturing executives is to compare their activities to part of their parent’s innovation tool box. In fact, reference to the innovation toolkit was used in two interviews ahead of this magazine being published.
The two linguistic craftsmen were Unilever Corporate Ventures head Martin Grieve, who outlines how the group is adapting as it starts investing its $450m third fund (see profile), and Shell Technology Ventures’ Geert van de Wouw, who is looking to rejuvenate the corporate venturing unit (see comment), which had previously been run as a third-party fund with the backing of secondaries firm Coller Capital. These two executives were articulate on the subject of how their jobs fitted into the larger corporate paradigm.
The Unilever Corporate Ventures profile looks at how the unit is reforming its sector focus in order to emphasise four key sectors – personal care, refreshment, digital marketing and sustainable business. Before this, the unit had had a slightly broader focus, but to ensure it can best meet the needs of its parent, it has conceptually rethought its structure. You can imagine a craftsman deciding to leave a tool out of the toolbox if it is heavy and seldom used.
The Shell Technology Ventures’ approach focuses on four principal investment strategies “that involve participating in funds of funds and limited partnership positions, acquiring or gaining access to third-party technologies, commercialising Shell intellectual property with others” and concentrating on 10 main investment areas, ranging from gas processing and conversion to the identification of future energy technologies.
The broader approach perhaps reflects Shell Technology Ventures’ rejuvenation – when embarking on a new programme it makes sense to ensure you are exposed to every area that may bring value to your parent – you do not want to be caught without an essential tool, which a competitor might have in his box.
Our consumer sector feature this month identifies how a number of groups, such as media company Condé Nast and credit card company American Express, have made forays into the consumer markets through their dealmaking (see feature). Such cross-sectoral activity is a key focus of our journalism, as we want to understand why corporates are looking further afield.
To understand the corporate venturing sector better, we have started the first of our quarterly data reviews (see analysis). We are excited about this new effort, as we think the more we drill down into our data, the better you, our readers, will understand what is going on in corporate venturing.
The data shows Intel Capital, the corporate venturing unit of the chipmaker, was the busiest during the first quarter, with comparatively new entrant Google Ventures close behind. It also reveals that highly regarded venture stalwart Sequoia Capital was the busiest partner of corporates, just ahead of peer Kleiner Perkins Caufield & Byers, which was the busiest partner with corporates last year.
This issue also looks at the legacy of outgoing National Venture Capital Association (NVCA) head Mark Heesen (see Man in the news). Heesen has been a strong supporter of corporate venturing in his time at the helm of the NVCA, and is one of the most vocal people in mainstream venture capital arguing for firms to embrace corporates more.
Heesen says in the interview: “[Corporate venturing] is the one area of growth in venture industry. As you see the number of VC firms shrinking, the corporate side of things is growing … This is not a passing fad as some may think. It is not cyclical. Corporates are much more professionalised, strategic groups. Financial VCs need to wake up a little and understand they are part and parcel of the venture ecosystem going forward and their interests are aligned with the financial VCs.”
Perhaps the future co-operation corporates should expect from a weaker venture capital industry will be one of the greatest aids to the toolkit, as corporates that equip themselves well to invest in venture can expect to receive better treatment from their VC peers than they have had at times in the past.