There were four streams: Asia, Europe, Americas and Energy.
The insights started with Gen Tsuchikawa, chief executive of Sony Innovation Fund (SIF), chairman of the Asia stream.
He highlighted how the company had made 10 deals since April and had launched a new fund with an impact focus on the environment. This fund started by turning African deserts into rich farmland in an eco-friendly way.
Tsuchikawa also highlighted that Sony was fortunate to support female chief executives internationally and in Japan-based startups. He also expressed the “hope [that he would be able] to invite everyone at Sony’s headquarters in Tokyo next year for the next GCV Asia Congress”.
Impact and sustainability was a running theme, with Sir Ronald Cohen, chairman of the Global Steering Group working on impact investing, giving a keynote and answering questions from attendees about his new book, Impact: Reshaping capitalism to drive real change.
Ira Ehrenpreis, managing partner at venture capital firm DBL Partners, said: “The impact investing sector – and even the traditional venture capital sector for that matter – often focus on new entrants to the asset class, new funds raised, and the total amount of AUM [assets under management].
“One of things I love about your new book, Impact, is that you place the entrepreneur at the centre of the rise impact investing movement. For those of us who have been on the frontlines of deploying capital for several decades, we know that it is all about the entrepreneur and the talent entering the industry.
“You have written about my close friend and colleague of many years Elon [Musk, founder of Tesla and SpaceX] and the impact he has had in positively disrupting the automobile and energy industry. And you were fortunate to invest in some incredible entrepreneurs like Steve Case and Steve Jobs.
“How have you seen the depth and breadth of entrepreneurial talent in the impact investing sector evolve, or mature? Relative to what you saw in the technology industry?”
Sir Ronald pointed out that big crises led to big steps for change and there would be “impact unicorns”, private companies worth at least $1bn in value and affecting one billion people.
Similarly, speakers from across sessions, including Lo Toney from Google-backed Plexo Capital, Shiva Dustdar from the European Investment Bank, Andrea Hoffman and Daryn Dodson to Jay Eum, father of South Korea’s corporate venturing industry in North America, pointed to the need for change and greater diversity and inclusion.
The key question covid-19 has thrown up is whether CVCs will retreat or advance in the downturn. Martin Haemmig, who is an adjunct professor at the Center for Innovation & Technology Management in Germany and the Netherlands, has analysed GCV’s and other venture data. It showed venture retains a global perspective and dealmaking has held up.
He prefaced his talk by pointing out that the number of businesses created in the US this year – an estimated 3.2 million – was the highest since 2007, defining the drivers as “necessity and opportunity”.
Haemmig also drew the audience’s attention that corporate venture capital (CVC) participation in VC deals, by number of deals, had gone from 15% in 2011 to 20% in 2019 and held up during the covid-induced lockdown. He also noted that while total deal numbers were down, the situation was “not as bad as one may have expected it to be”.
Haemmig also offered takeaways based on his research, such as: internationalising much earlier, as globalisation appears to be startups’ growth driver; leveraging corporate venture investors for this internationalisation; and focusing on striking business deals with corporates, which would then bring in more equity funding.
Representatives of corporates, such as Jeffrey Li, who is managing partner at Tencent, and Rajeev Misra, CEO of SoftBank’s Vision Funds, reiterated their desire to step into the opportunities. Tencent invests most of its $10bn of net profits each year in minority investing, Li said, while SoftBank is active through its second Vision Fund and other vehicles. Others, including Om Nalamasu, chief technology officer at Applied Materials and president of its Applied Ventures unit, Jason Young, senior vice-president and head of T-Mobile’s corporate venturing unit, and Stefan Oschmann, chief executive of Germany-based Merck, gave powerful keynotes on future areas of opportunity.
However, Touchdown Ventures’ survey of VCs and CVCs found, outside the big firms, caution and a disconnect between perception and reality for the corporate venturing community.
But more corporations are being drawn in by the opportunities, and they are increasing their professionalisation – the GCV Institute of online training, which will complement the GCV Academy, already has a waiting list.
The roundtables covered different sectors and regions, showing off a host of ideas and best practice. The GCV Digital Forum app, run by Brella, hosted hundreds of virtual meetings and discussions.
And prosperity relies on this continuing. Philip Coggan, the Bartleby columnist at The Economist magazine, said his latest book, More, clearly found the conditions for prosperity rely on connections between people for trade, specialisation, ideas and freedom.
Fintech roundtable
One of the roundtables was dedicated to financial technology and moderated by Alex McCracken, managing director at Silicon Valley Bank.
Participants included Sam Myhrman from Sweden-based bank SEB; Jacqueline LeSage Krause, managing director at Munich Re Ventures, the venturing arm of reinsurance company Munich Re; Stefan Tirtey, managing partner at CommerzVentures, the venturing subsidiary of Germany-based Commerzbank; and Alokik Advani, managing partner at Fidelity International Strategic Ventures (FISV), one of the venturing units of financial services company Fidelity.
Tirtey said the pandemic has accelerated the general digitisation trend in the sector: “There is hunger for growth and lot of liquidity in the markets. Clearly for VC investors that comes in the form of opportunity for early liquidity. In terms of opportunity, we are thinking about the underlying drivers. A lot of the covid-19 changes have had an effect. In banks, it has increased digital presence, while consumers look to buy financial products like insurance via a digital channel.”
Advani agreed and said that the level of engagement on B2C platforms over the last six months was unprecedented. Myhrman added: “More people in this downturn went digital in terms of wealth management services.”
LeSage Krause concurred and noted similar positive developments have taken place in the insurtech space: “Enablers are startups that help incumbents to achieve their goals. With the pandemic there is [now] a lot more urgency for accelerating their growth. For the challengers it has been an even more fantastic year. With the IPO of Lemonade, for example.”
The new ways of working in the pandemic have, in fact, helped some startups in their sales efforts. Advani explained: “Because people have been working from home and through Zoom, you can get access to them easier now.” He pointed to a portfolio company that had been able to do B2B sales much more easily now than before.
The pandemic also appears have opened more opportunities outside fintech or for innovation in existing financial products. Tirtey commented: “The risk awareness on part of consumers has changed. Now with the pandemic having happened, there is a conscious assessment of other risks, such as climate change. There might be a pocket of opportunity for investments.”
Advani said this environmental awareness extended into financial products: “The theme that comes on the back of that is having mass customisation of financial products, with, say, ESG in indexing.” LeSage Krause added she had also seen “quite an uptick in investments related to climate change”.
The pandemic has, however, exerted some not-so-positive impact on some parts of fintech, particularly in alternative lending and crowdfunding space. Myhrman commented: “To some of the alternative lenders a lot less capital is being provided and investors are a lot more cautious.”
Tirtey noted there are some potential risks on the investment side as well: “A lot of funds willing to make investments are getting seats at the table where they previously would not have and there is risk involved in that.”
Asia stream: India roundtable
Martin Haemmig, adjunct professor at Center for Innovation & Technology Management in Germany and the Netherlands, led the India roundtable.
The session included six speakers, representing VC firms, corporate venturers and entrepreneurs. Among them were Karthik Prabhakar, executive director and partner at venture firm Chiratae Ventures and Arvind Vasu, senior vice-president of Asia Investments at ABB Technology Ventures, the venturing subsidiary of industrial automation company ABB.
The roundtable also featured Vishal Ramaswamy, head of Lowe’s Innovation Labs Bangalore, Lowe’s local innovation initiative; Sanjay Nath, managing partner at venture firm Blume Venture Advisors; Vikram Gupta, managing partner at IvyCap Ventures; Aniruddha Sharma, CEO at carbon capture technology developer Carbon Clean Solutions and Ashutosh Sharma, the India head of investments for Prosus Ventures. Varsha Tagare, managing director at Qualcomm Ventures, also joined with a pre-recorded interview.
Haemmig gave the audience a data update on venturing investment and exit activity in India, noting that during the first half year was “not that far off” the levels of 2019 despite the pandemic and the lockdown. He also mentioned the large private equity debt deal, of more than $20bn in Reliance Industries’ Jio Platforms private equity debt deal. The digital services company reportedly has nearly 400 million subscribers and revenues approaching $10bn. Jio received backing from social media platform Facebook, semiconductor and chipmakers Intel and Qualcomm as well as from diversified internet conglomerate Alphabet.
Scrutinising data on India, Haemmig noted an interesting and persistent trend – foreign VC funds invest much more in India-based emerging businesses than local venture firms and the number of external funds investing in India has remained stable over the years. He also said that “corporate investments are still in the growth phase and relatively fewer than in Europe, the US or other geographies”. The volume of exits and their dollar value still appears relatively modest, except for the $16bn acquisition of e-commerce firm Flipkart by US-based retailer Walmart. Haemmig also mentioned that India currently boasts 30 unicorns, mostly technology companies.
On the question of why there is more foreign capital than domestic, the roundtable participants held different views.
Prabhakar of Chiratae Ventures noted the more active involvement of the government in promoting the startup ecosystem. He also mentioned the growth of domestic capital in Indian public markets has been more than enough to compensate for the flight of institutional foreign capital from Indian stocks, hinting a similar scenario may play out in venture capital. Nath of Blume Venture Advisors also said that “things are getting better and the government has made massive inroads” with its policies to drive innovation. Aniruddha Sharma of Carbon Clean, the only entrepreneur at the table, opined that while the Indian government has got involved in fostering innovation, “risk taking on part of the government is still missing”, citing data that funding volume in grants is 25-30 times smaller compared with the Western world.
According to Haemmig’s data, Indian corporates have been slow to jump on the venturing bandwagon. Gupta of IvyCap Ventures attributed this to the relative novelty of VC in the country: “Indian corporates are still in the process of learning and understanding. Venture capital is still relatively new in India compared to the rest of the world. The corporate mindset in India is still very different. There are quite a few corporates that are still not out there yet, still watching by the wayside, testing ideas via family offices and so on.”
Foreign corporates, however, have already identified value in the Indian innovation ecosystem. Vasu of ABB Technology Ventures noted that, though India seems more associated with e-commerce and similar sectors, he has found interesting ideas for his pipeline in more industry-oriented technologies: “We have seen more such startups beginning to emerge. Obviously, AI and deep tech are catching up but there are already things like robotics and even battery technologies coming out of Indian startups.”
Vasu also stressed the still-undiscovered potential of the Indian ecosystem by investors worldwide: “We are still looking at a market with startups largely untapped compared to the rest of the world and we still have enormous opportunities.”
Some corporates, however, seem to have arrived early on the scene. Ramaswamy, who heads US-based home improvement retailer Lowe’s Innovation Labs in Bangalore, noted that corporates’ perception of India has shifted: “Some years ago they would see India as a talent hub and outsource activities here, now they see it as an innovation hub.”
Limited though it may be, corporate engagement with the Indian startup ecosystem and Indian entrepreneurs has brought the latter tangible benefits. Sharma of Carbon Clean cited numerous examples of collaboration between his company and various corporations, including oil and gas majors Chevron and Equinor, cement producer Cemex and energy services company Veolia, which helped Carbon Clean obtain clients in geographies where the company lacks presence.
In terms of exit risks created by covid-induced challenges, Sharma of Prosus Ventures expressed his overall long-term optimism: “The entrepreneurial system is the most vibrant we have seen in the past 10 years, across all sectors. Beyond just the numbers, the fundamentals and long-term macro expectations are holding up. There are some short-term risks but the demographics really play in favour of India’s strengths. The talent and quality are there as well. Given all that, the future looks very bright.”
Gupta explained the geopolitical situation, combined with increased support of the local ecosystem, has actually had a positive overall effect: “Nobody expected the kind of scenario we are facing today. On the one hand, there has been a backlash as far as China is concerned and investors who were looking to invest in China are now talking to Indian VCs. The Indian government has been very active in terms of policies encouraging the startup ecosystem.”
Gupta added that much like other markets, the pandemic had accelerated the development of some businesses and stalled others: “Tech and consumer tech have benefited greatly. We have seen a J-shape recovery with post-lockdown numbers looking better than back in February. The impact was positive for edtech, fintech and health tech. Things like travel and hospitality were negatively impacted. Even if they have had a good tech story in the travel space, entrepreneurs [in those areas] are quickly pivoting to different business models that are helping them.”
Energy stream: decarbonisation and sustainability
Tom Whitehouse, contributing editor at GCV and chief executive of Leif Capital, interviewed Barbara Burger, president of Chevron Technology Ventures and vice-president of Innovation at oil major Chevron. Whitehouse asked whether it was appropriate to describe the cleantech situation as “This time it is different.”
In cleantech 1.0, up to 2008, there was VC activity but without exits and with heavy capital investment required, interest from corporations and VCs fell over the following decade.
Burger argued that this time is different, while acknowledging some of the challenges ahead: “We all know what happened with cleantech 1.0. Now the investor class is different – they know the time horizon and the scale required. There is a lot of support for entrepreneurs. I am very pleased with all the incubators, accelerators that are in place and so on. Incumbent companies are making commitments and taking action, unlike last time. There is a much broader sense among corporations that we need to transition to low carbon future. It is still not going to be easy!”
During the lockdown, Chevron Technology Ventures was not idle: the venturing arm added its first investment in a nuclear fusion business, Zap Energy. Nuclear fusion occurs when nuclei of lightweight elements collide with enough force to fuse and form a heavier element – a process that releases substantial amounts of energy with no greenhouse gas emissions and limited long-lived radioactive waste. Zap Energy’s technology stabilises plasma using sheared flows rather than magnetic fields to confine and compress the plasma.
Burger said the investment made sense in light of Chevron’s efforts to decarbonise its core business, part of which implies “investing in technology and scaling future energy verticals”. She also said: “Nuclear [energy] is seen to be a key part of the future energy system for the clean base load but current technology has a lot of limitations. There is quite a bit of innovation in fusion. We chose Zap Energy as our first investment and you will see how it plays out.”
In an energy-focused discussion, Gina Domanig, managing partner at Emerald Technology Ventures – a venture firm with multiple corporate LPs, also pointed out some of the differences. “Not only has the terminology changed over the past 20 years but also the strategy. Back then an impact investor meant a ‘charity’. She also said it is “important to recognise not just that there is interesting technology but there is an urgent, burning need to find a way to help those companies be successful”, alluding to climate change issues.
Mark Frayman, vice-president of venture investments at mining company BHP also participated. He noted that BHP has made strides in “formalising what we had been doing on ad hoc way, trying to do it in a much more systematic and professional way”. He also mentioned BHP had co-invested with Chevron in a couple of deals.
“We are utilising a corporate venturing vehicle to drive innovation in decarbonisation but also driving growth in the core mining business. Mining is quite different from oil and gas. The opportunity is huge in our copper and nickel business in terms of the electrification of the world and battery technologies. We are also looking at recycling and circular economy technology as well as waste-to-energy plays. There is a really a strong economic case,” said Frayman.
Geert van de Wouw, managing director of Shell Ventures, talked about the entrance of tech companies into cleantech investments: “The covid-19 situation has only accelerated the opportunity. We see things that we have invested in being deployed in our company. At the same time, we see big tech companies pledging climate change funds so that is an opportunity for us to partner along the lines of our zero-carbon footprint ambition.”
Explaining how his company’s collaboration with Microsoft works, he said: “We are suppliers to each other. They supply IT services and we supply energy for their data centres. We need to digitise our businesses and they need to drive toward zero carbon going forward.”
David Hayes, chief investment officer at BP Ventures and managing director of BP Ventures, Americas, also commented on BP’s vision of a low carbon future: “The pace of innovation will have to increase to meet our future objective and much bigger commitment to reposition us from an oil and gas company to an energy company. I think what you are see is not only BP’s commitment to venture but also trying to innovate at a much quicker pace than traditionally.”
Sustainable portfolio companies
Whitehouse also hosted two sessions in which corporate VC executives introduced portfolio and partner companies advancing sustainability.
BP Ventures and Finite Carbon
Nacho Gimenez, managing director of Europe & Middle East at BP Ventures, introduced Sean Carney, president of Finite Carbon, a US-base forestry carbon offset services company. Founded in 2009, Finite Carbon provides services to help landowners or industrial forest carbon project development and commercialisation services, so landowners can create and monetise carbon offsets and industrial clients can offset part of their carbon footprint.
Gimenez commented on tackling climate change: “We are focusing on decarbonisation activities and helping the world to get to net zero. We need three agents: government, companies and society. We need government to set the regulatory framework. We need companies and investors to invest and develop solutions and finally consumers through their choices to start demanding better things. There are going to be sectors that are going to be hard to decarbonise so changing investments though forestry will be the way to go. This is about including credits in our portfolio on the way to net zero but it is not going to make us reach net zero.”
Carney explained about his company: “What is different today is the advanced technology. Satellites, artificial intelligence and machine learning were complete unavailable to a small business like ours a decade ago and that has changed.” He also explained: “Every year Finite Carbon offsets 2% of carbon emissions in California. We have enrolled three million acres so far. We have developed an online platform for measurements of trees and use satellite images to estimate carbon reduction. It tells landowners how much money they could get for their trees or how to improve an existing forest by planting bigger trees.”
National Grid and Leap
Leap is a startup that helps small-scale producers of renewable energy access the larger grid and its founder and CEO Thomas Folker, who was introduced by Dillon McDonald, vice-president of incubation at energy utility National Grid.
McDonald pointed out the strategic and financial orientation of National Grid as a venture investor: “We are certainly strategic but we are financial first, looking for great new businesses to invest in early.”
Folker described his company’s solution as an aggregator of aggregators and, modestly: “In the worldwide [energy] transition, Leap plays a tiny role. It is a software platform to aggregate and sell power to the wholesale market. Anyone who generates extra electricity can sell it to the grid.”
Chevron Technology Ventures and Carbon Clean Solution
Pawel Konzal, venture executive at Chevron Technology Ventures introduced Aniruddha Sharma, CEO of Carbon Clean Solution, a developer of a carbon capture technology. Konzal commented: “We see the importance of carbon capture, utilisation and storage. There are, however, some challenges to be resolved such as the cost and Carbon Clean is trying to solve exactly that.”
Sharma said he had met Chevron at a previous GCV event and that his company is “looking to develop projects and take them to scale in the next 20 months”. He cited a recently signed partnership with Japan-based industrial conglomerate Marubeni, where the company has launched what he described as a service “on a pay-as-you go basis”. Carbon Clean had also deployed its solution in partnership with consumer goods manufacturer Unilever in one of its plants in India, where captured CO2 is turned into green chemicals that are used to produce cosmetics.
Sharma also added: “We are seeing a massive transition where people prefer to purchase green products rather than grey.”
Caterpillar Ventures and CarbonPoint Solutions
Michael Young, the managing director of Caterpillar Ventures, the venturing arm of industrial machinery producer Caterpillar, introduced Paul Dunn, president of CarbonPoint Solutions.
Young said: “Our core vision is highly aligned to Caterpillar. While it is great to be idealistic, for 95 years our customers have been demanding cost effective and reliable products and they need cost effective and reliable solutions. “That is what we aim to invest in as well.”
Dunn explained that what differentiates his company’s technology is the ability to concentrate CO2 in the carbon capture process and make it economically viable.
Caterpillar Ventures and Synova Power
Young also introduced Van Morris, chief executive of Synova Power, a waste-to-energy technology developer. The former explained the rationale: “The world´s waste problem is getting bigger and bigger. There are so many resources that are being buried in the landfills.”
Morris said his company’s solution revolves around plastics circularity: “Why do we not make new plastics from plastic waste rather than virgin oil? There are two key notions: chemical recycling is going to be a big business and we believe Synova has a technological advantage.”
Morris added that he believes the company’s advantage lies in being able to process “a large percentage of the feedstock of recycle plastic that is out there”.
“Synova has patented a technology that tackles some of the hard to deal with tars that are found in recycling processes.”
HG Ventures and Puraffinity
Another solution designed to clean pollutants is Puraffinity, whose chief executive and co-founder Henrik Hagemann was introduced by Ginger Rothrock, senior director at HG Ventures, the venturing unit of environmental services company The Heritage Group.
Puraffinity has developed a technology to capture chemicals that eliminate water pollution.
Hagemann described Puraffinity’s technology as a “precision tool to capture chemicals in water selectively, as we have seen an increasing need and demand to target specific chemicals, particularly difficult pollutants, using biobased reusable materials.”
Rothrock commented on the strategic fit: “A lot of clients [of the Heritage Group] are dealing with water purification issues. In addition, on the consumer side, more and more consumers are interested in this space.” She characterised this type of solution as a “need-to-have, not a nice-to-have”.
Hyundai Air Mobility and SMAL
Adam Slepian, global head of partnerships at Hyundai Air Mobility, a division of carmaker Hyundai, introduced Ricky Sandhu, chief executive of SMAL (‘Six miles across London’), which designs landing and take-off platforms for the urban mobility aircraft of the future.
Sandhu pointed out there are already some customers in the UK, as the company aims to service not only air taxis but also cargo and delivery drones.
Slepian said: “As Hyundai is now moving into the aviation space and our goal is to create a vertical take off and landing aircraft to move people around cities. We are focused on the future of air mobility. However, Hyundai started historically as an infrastructure company so it is great to have an infrastructure company [like SMAL] in our portfolio as well.“
Denso and Bond Mobility
While flying cars may be far away from full adoption, the residents of scores of cities already have access to smart, alternative modes of transport such as electric bikes.
Bond Mobility offers premium electric bikes and its company’s chief executive, Raoul Stöckle, was introduced by Tony Cannestra, director of corporate ventures at automotive part manufacturer Denso.
Cannestra explained the strategic fit of the investment in terms of opportunities in emerging modes of transportation: “The boom in e-scooter and e-bikes sharing has a place in the overall world transportation structure.
These other modes of transportation are very interesting to us, as they are different from our traditional business and we are exploring what roles we could play in terms of smarter vehicle, infrastructure and so on. We are starting to see and embrace these different modes of transportation.”
Stöckle described the product and service of Bond Mobility as follows: “Premium quality Swiss-design e-bikes with a machine learning system telling us where bikes will be needed around the clock.” He also explained that the company incentivises users to move them via bonus points, driving operating costs down.