Nobuyuki Akimoto of Japan-based telecommunications group NTT and Matthew Koertge of Australia-based telecoms firm Telstra discussed the challenges and opportunities for corporate venturing in the sector at the GCV Symposium this morning.
The telecoms industry is in an uncertain space at the moment as new media companies disrupt traditional revenue streams and competitors like Google Fiber emerge from leftfield to challenge them, meaning corporate venturing has become increasingly important.
Akimoto has been at NTT for 30 years and is currently chief operating officer of its $100m corporate venturing subsidiary, NTT Docomo Ventures, which operates on behalf of NTT Docomo, the largest mobile carrier in Japan by subscribers. It is tasked with accelerating core innovation within the company while still turning a profit.
“We really do care about the financial as well as the strategic return,” Akimoto said. “What I have learned is I have to stop asking myself about whether our objective is a financial or strategic return.”
The unit focuses on open innovation, combining sustainable innovation that builds on existing services with disruptive innovation that creates new business models or services, despite the fact the latter may not always be eagerly accepted by other parts of the company.
“I believe the important thing is not to talk to the group companies or R&D because they do not like to be disruptive,” Akimoto said. “NTT Docomo Venture Capital needs to do our own studies on the future and the market, for our own strategy.”
Telstra launched its strategic investment arm, Telstra Ventures, in 2011 and it has so far invested $250m in a total of 29 companies. It invests at growth stage and so exits are easier to come by – it has recorded seven so far – and concentrates on companies where there can be a direct strategic link.
In contrast to NTT Docomo Ventures’ independent approach, Koertge, managing director of Telstra Ventures, stressed the importance of collaboration within the group, explaining how every investment it makes needs to be sponsored by a Telstra business unit. As a result, the deals often lead to direct collaborations.
The unit’s 2014 investment in real-time data processing company Matrixx Software enabled Telstra to offer real-time billing visibility to customers, while funding 5G technology developer Cohere Technologies has given it visibility into the next step for the next phase of mobile telecommunications.
Telstra has backed 15 companies in the US and a further nine in its home country, with the rest based in Asia, though Koertge said the unit is largely agnostic when it comes to where its portfolio companies are situated.
“We look at a particular business problem, look at everything that is going on in that space, and then look at where we can invest,” he explained.