Change is in the air. Corporate venturers during the first day of the Global Corporate Venturing & Innovation (GCVI) Summit in Sonoma, California, were broadly optimistic about how their industry could take an increasingly important role in the innovation capital ecosystem.
After the all-time highs of 2015, when GCV Analytics tracked 1,693 deals worth an aggregate $76.4bn – a near-doubling in value over 2014’s $40.9bn, the sentiment in the broader Silicon Valley region has been one of deals taking longer to close, a focus on backing businesses with better financials and trying to use the dip to access strong companies while avoiding being dumb money propping up weaker ones pushed by VCs looking for a valuation bump to support their own discussions with limited partners.
Nagraj Kashyap, vice-president of Microsoft’s venturing unit since the start of the week after leaving Qualcomm Ventures after 12 years, used the opening address as co-chairman of the GCVI Summit to advise newer groups there was no need to rush in deals.
He said: “2015 was a great year. An all-time high.
“There is no need to rush if you are starting. Be careful investing in later-stage, high value deals. There were 124 unicorns [companies worth at least $1bn] compared to 43 in 2014, [according to data from CB Insights]. 2016 will see if many of them survive.”
Kashyap’s move to Microsoft to set up a new unit after building one of the largest and most successful teams at Qualcomm Ventures, which is expected to continue under new head Quinn Li, was one of the main talking points for the 450 attendees. They were also excited to hear the plans from Intel Capital’s new leader, Wendell Brooks, and amid expectation of change at another industry leader. (GCV is respecting a confidence shared about this long-planned retirement while the successor’s confirmation is concluded.)
Brooks in his first public speech since the retirement of Arvind Sodhani gave a powerful, energizing speech that laid out a clear vision of continuity – Intel Capital will continue investing $300m to $500m per year – and evolution by leading more deals (from 40% historically to 50-60% in future), adding more value by taking board seats, refining its processes to be faster and being less “insular” and working more with appropriate partners and always asking “what can we do for our portfolio companies, not what can they do for us?”.
Deborah Hopkins, chief innovation officer at Citi and CEO of its Citi Ventures corporate venturing unit, introducing Brooks after her prior keynote address, had said: “We are here because of Arvind. His are big shoes to fill and to step in is a big deal.”
Brooks said he recognised this and was “learning something new every day.
“It has been completely energizing and I feel 20 years younger than I did when I was an investment banker [at Allan & Co, where he had set up its European office in London].”
Brooks had joined Intel three years ago after helping sell Intel Media to Verizon and last year agreed its largest acquisition in buying Altera. When Sodhani was retiring he was approached by Brian Krzanich, CEO, and Stacy Smith, chief financial officer (CFO) about effectively recombining the mergers and acquisitions and ventures role, as had been done before he joined the company.
He said corporate venturing offered a lot more value than traditional VC by focusing not just on cash on cash or internal rates of return but making pathfinding investments, supporting business divisions and being socially responsible.
Having a corporate limited partner was “quite a taskmaster,” he said and added: “Our responsibility is to be in-between [financial and strategic extremes].
“Intel spends $25bn a year on R&D, M&A, business unit marketing, whereas Intel Capital does $500m so we cannot just follow business units [BU]. It is increasingly important to plot a different path with a bigger agenda, investing as a hedge to BU strategies.”
While Intel invests across a broad range of technologies, its general themes are drawn around entrepreneurs trying to influence new strategies and products Intel could use, technologies that continue Moore’s Law and diversity and inclusivity.
The previous night’s GCV Rising Stars awards had recognised nearly half were women and the corporate venturing industry panel after Brooks’ speech looked more at the topic of inclusivity. Led by Kay Koplovitz, whose research included GCV Analytics data that nearly all of the top 50 corporate venture Investing firms have women in their senior investment ranks.
Sue Siegel, CEO of GE Ventures, said 40% of her team were women and 69% minorities as their openness to hiring and supporting the best talent attracted applications. Given GE Ventures is effectively three years old and has about 100 people in its broad team, this is a strong signal of what can be achieved.
Siegel is a member of the Global Corporate Venturing Leadership Society’s advisory board, chaired by Claudia Fan Munce, head of IBM Venture Capital, which was inaugurated as a proposal at the GCVI Summit – starting details here with final development expected by the May 24-25 London Symposium. The Leadership Society is looking to inform the community, connect leadership, and transform business within the Global Corporate Venturing (GCV) ecosystem.
Judging by the first day, therefore, the industry is laying a firm foundation for a bright future.