Bubble or boom, we live in record times for innovation capital as well as a Nasdaq stock market beating its dotcom-era highs. Data provider Preqin said the amount of capital invested in entrepreneurial companies globally by the venture capital industry hit a record $34bn between April and end-June (Q2), up from $29bn in the first quarter of 2015.
The $63bn invested over the first half (H1) of the year was 48% greater than the amount of capital invested through the first half of 2014, and 145% more than the amount of capital invested in H1 2013, Preqin added.
Alternative, non-traditional VC funds made up an increasing proportion of this money, in many ways led by the 341 corporate investments in Q2, as last month’s Global Corporate Venturing’s (GCV) Q2 data supplement showed (you can download it here.)
Over the past five years since GCV launched and began tracking which corporations supported the entrepreneurial community, the deals in which they invested and the funds they raised, their involvement has only deepened.
Q2’s data, drawn from our unique survey of the leading 250 corporations and journalism and algo-tracking of public reports, also gives a unique breakdown of the stunning 43 new funds and CVC units that were launched in Q2 with more than $9bn of allocated capital, providing special insight into booming Asian activity and its impact on the US, the other major innovation capital ecosystem.
Europe and the rest of the world are still in many ways trying to catch up but judging by the interest of firms from Brazil (where we are preparing an event from 19-21 October) to Korea, the interest in trying to do so remains strong.
What is perhaps as significant for the innovation ecosystem is the increasing number of commitments (39 in Q2) corporations are making to VC funds. Over the past decade VC trade association data indicated such corporate commitments had seemed to be in decline, so a potential resurgence appears both counter-intuitive and important to the diversity of the ecosystem.
It could be argued that declining commitments had reflected the relative lack of value VCs had provided to strategic limited partners and corporations’ growing sophistication in making direct deals. But given the threat of disruption from new sectors and regions and the opportunities they also spawn, putting in place a well-developed direct and indirect investment strategy seems sensible.
Making third-party commitments also keeps a longevity to the programme in case of sudden economic dislocation closing off direct dealmaking. That so many of the direct CVC funds being set up are trying to model themselves on similar longer-term access to capital could be significant as booms always end and bubbles eventually pop.
To help corporations and others better understand your peers and best practices we will be opening the beta testing of GCV’s interactive data portal to a second set of selected users next month – to be considered please send me a note while Toby Lewis, GCV’s editor, is on holiday – and learn from the thought leaders at our GCV Academies (coming up in Shanghai, California and London) and our Global Corporate Venturing & Innovation Summit in Sonoma, California, from 26-27 January.
Note, subscribers can click through the links in this email to read the full articles and more. Learn about subscriptions here to read all the great material we produce, or contact Tim Lafferty to help with the process at tlafferty@mawsonia.com