Above: Sue Siegel, GE, Jessica Straus, NVCA, Nagraj Kashyap on stage at the GCVI Summit 2017
Day 1
GE Ventures: building bridges
Sue Siegel, chief executive of industrial products conglomerate GE’s corporate venturing unit GE Ventures, told the GCVI audience that for corporate venturers “the time is now”. Siegel, chairman of the GCVI Summit, gave the keynote address on the first day, and noted the growing importance of corporate venturing in global business.
The summit opened the day after a pre-event workshop and dinner to recognise the top 100 Global Corporate Venturing Rising Stars. These Rising Stars, celebrated at the inaugural Global Corporate Venturing awards, represent the top 1% of the industry, and were selected by researching more than 10,000 industry professionals across more than 1,000 corporate venturing units.
In an interview with John Riggs, principal and partner of innovation and corporate venturing at consultancy firm PwC, Siegel noted that these days CVCs are seen as financial and strategic bridge builders working collaboratively with entrepreneurs, rather than as islands remote from the startup industry. “CVC in its primary incarnation is still indispensable,” Siegel said.
Corporate venturing divisions did face challenges – while emerging technologies were very powerful, investors needed to find a sustainable model to fuel growth, and that could be a challenge for units with large parents. Siegel pointed out that GE was some 120 years old, and dealing with a scale of disruption never experienced before in its industry.
Looking to the future, Siegel said that following her unit’s launch of five companies so far, GE Ventures was preparing to conduct more such deals, with several in the pipeline for 2017. Additive manufacturing in particular would be a very big area for GE, she said.
During a conversation about diversity – a key issue speakers raised throughout the summit – Riggs observed that GE Ventures had always been hailed as a leader in this area, prompting Siegel to joke that she skews the numbers by being “an ethnic minority, a woman – and short”.
Microsoft Ventures: hitting the ground running
Peggy Johnson, executive vice-president of business development at computing company Microsoft, joined Siegel for an onstage interview. In her current role, Johnson manages Microsoft’s relationship with the venture capital community, and oversees strategic investments made from the company’s corporate venturing fund, Microsoft Ventures.
Before joining Microsoft, Johnson held several leadership positions at semiconductor manufacturer Qualcomm, where her responsibilities included developing the world’s first app store for Qualcomm in 2001 – six years before the first iPhone was launched.
Johnson started at Microsoft at a time when the company was undergoing significant strategy shifts following the appointment of Satya Nadella as chief executive. At first, Microsoft, she said, was averse to launching an investment fund, as the preference was to invest directly from the balance sheet, but after some missed opportunities to do deals, Johnson decided the time was ripe for change. In January 2016, she brought onboard Nagraj Kashyap, former head of Qualcomm’s corporate venturing unit, to spearhead the new Microsoft Ventures.
According to Johnson, Microsoft Ventures is free to make its own investment decisions, as no business unit in Microsoft can veto its choices. Indeed, this is a differentiating feature that Microsoft Ventures “has tested a couple of times”, Johnson said.
Microsoft Ventures now functions with three distinct levers – early and late-stage investments, partnerships and acquisitions. These levers are used at different times for different reasons, but always with the same question at the heart of all decision-making – whether a deal solves a specific problem for Microsoft.
On diversity, Johnson said Microsoft Ventures had had a great opportunity to build a team from scratch, starting with Kashyap. At the investment unit, diversity was less about ticking boxes, and more about creating a team made up of members with diverse networks and ideas – which organically resulted in a highly diverse team in terms of gender and ethnicity, she said.
With 19 deals struck since July 2016, Kashyap had captalised on the diverse ideas generated by his team of seven to invest in a range of businesses. Kashyap’s impact had been far-reaching, Johnson said. It was Kashyap who introduced Microsoft to speech recognition specialist Maluuba as a potential investment last year, and just last month Microsoft bought the Canada-based startup for an undisclosed sum. Maluuba’s technology will be added to Microsoft’s own artificial intelligence development, which includes work on deep learning-aided speech and image recognition.
Intel Capital: delivering positive changes
In another company scorecard update, Tami Hutchinson, chief of staff to the president at Intel Capital, the corporate venturing arm of chip maker Intel, commented on changes at the division since Wendell Brooks took over 12 months earlier.
Brooks promised fewer but larger investments when he outlined his vision for Intel Capital at the GCVI Summit a year ago, and these had led to positive changes, Hutchinson said. Whereas Intel Capital previously led approximately half its deals, the unit now led more than 80%.
Brooks also made significant structural changes, such as reorganising existing teams, which used to focus on a specific area of expertise – for example, M&A or intellectual property – and reshuffled them, so that individual teams now contain an expert on each topic. Hutchinson said that the change has enabled Intel Capital to move much more efficiently in closing transactions. Concentrating the same amount of financial firepower on fewer deals was proving beneficial from a strategic point of view, she said.
Cisco and mega-innovation
Speakers throughout the first day debated a range of mega innovations, including autonomous vehicles, communications and mobile technology, artificial intelligence (AI), augmented reality (AR) and virtual reality (VR), bioengineering and the internet of things (IoT).
Amit Chaturvedy, head of internet of things, acquisitions and investments at networking equipment manufacturer Cisco, who was interviewed onstage by Jay Eum, co-founder and managing director of venture capital firm Translink Capital, said there had been a rapid shift in impact.
Two or three years ago, Chaturvedy said, there were no businesses making money in IoT, so Cisco decided to start identifying opportunities in that area. He emphasised that IoT was not a single sector, but rather an ecosystem play, and one in which no single company was handling the entire supply chain.
The complication for startups was that the uses of IoT varied a great deal by geography. In China, the technology was used primarily in manufacturing to track assets, while in Europe it was being used to develop smart cities.
This produced issues in scaling up companies, since tackling an entire ecosystem was a daunting and difficult proposition. But opportunities abounded, and Chaturvedy noted that Cisco was particularly keen on drones – though the company had yet to identify the right startup to invest in – and agtech.
Cars also offered enormous potential for disruption. The product that people tended to use the most, apart from their smartphone, was their car, Chaturvedy said, and even if, as estimated, 50% of automobiles on the road by 2025 were connected, that would still be a massive disruption.
Pursuing innovation in the US and China
Martin Haemmig, adjunct professor at Cetim, moderated a panel discussion on the topic of linking global drivers of innovation to CVC investments.
The panel included Jeffrey Li, managing partner at internet company Tencent, Chris Evdemon, partner at investment firm Innovation Works and chief executive at Sinovation Ventures, Denis Barriar, managing partner at private equity firm Cathay Capital, and Alvin Wang Graylin, China regional president of Vive, the VR platform of consumer electronics producer HTC.
Graylin noted that his company had conducted approximately 50 deals in the VR industry over the past year, with 20 of those in the US.
Tencent’s figure for the US came in at a similar 15 to 20 deals, but Li noted that these tended to be very early-stage investments conducted by a small team in Palo Alto. Li said that such “mega-innovations require collaboration”.
The panel largely agreed that China would be a global innovation centre by 2020, and in some regards already was. The country produces five times more engineering students than the US, though currently the best talent still goes to Silicon Valley, because it is easier to form a diverse team of global professionals in the English-speaking US than in Mandarin-speaking China.
Nevertheless, Barriar pointed out that China was already leading in mobile consumer products, and was a strong competitor in businesses such as shared bikes.
Both Li and Graylin said their ambition for the year was to close 100 deals, and strengthening their global position as established investors.
Max von Zedtwitz, professor at GloradCenter for global R&D and innovation, who took the stage to offer post-session thought leadership, drew further comparisons between the US and China, noting that of 6,432 research and development centres across the world, 2,308 were owned by US companies while 212 were owned by Chinese businesses.
DFJ’s Tim Draper: CVC at an “inflection point”
Tim Draper, founder of venture capital firms Draper Associates and DFJ, who was interviewed onstage by Ilya Strebulaev, professor of finance at Stanford University’s Graduate School of Business, said the VC and CVC world was at an inflection point that would either see valuations shoot up or come crashing down.
Investing in private companies was a very long game, Draper cautioned CVC leaders, noting that he had seen a lot of corporates come in at the peak and leave at the trough.
He also said he was aiming to figure out the liquidity problem, since even “if you own $1bn worth of Uber shares, you cannot buy yourself a cup of coffee”.
Draper was the first speaker of the day to dive into current US public policy debates that have stirred controversy, expressing concern over economic protectionism and rhetoric that fuels an aversion to immigration.
J&J on portfolio management
Tom Heyman, president of pharmaceutical firm Johnson & Johnson’s (J&J’s) investment subsidiary Johnson & Johnson Innovation–Johnson & Johnson Development Corporation (JJDC), spoke to Ram Jambunathan, managing director of the SAP.io Fund, about JJDC’s activities.
Heyman underscored the importance of portfolio management and monitoring to catch potential problems early. This was particularly important for J&J because its investments tended to be long term – developing drugs could take 10 to 12 years, and involve several clinical trials and regulatory approval procedures, and often that meant the corporate was needed to step in to assist investees.
JJDC, Heyman said, even made follow-on investments when the startup was no longer strategically important but had the potential to generate a strong financial return.
James Mawson, founder and editor-in-chief of GCV, took the stage to discuss the findings of The World of Corporate Venturing 2017 report. Some of those findings can be found in this month’s editorial comment.
Micro-venture funds
Several breakout sessions took place in the afternoon, including a workshop on government venturing from GCV’s sister publication Global Government Venturing. Following these sessions, back on the main stage, Michael Kim, founder and managing partner at Cendana Capital, Tim Connors, founder of PivotNorth Capital, Manu Kumar, founder and chief firestarter at K9 Ventures, and George Ugras, head of technology company IBM’s investment subsidiary IBM Venture Capital, discussed the importance of micro-VCs.
Connors noted that in the past, successful companies always had one investor that stuck with them from the early stage through to exit – these investors were firms such as Sequoia Capital – but increasingly, CVCs are coming in at the series A stage. The panel pointed out that a corporate’s strategy aligned well with that of a micro VC, as there was less emphasis on turning a startup into a unicorn – a company valued at more than $1bn –to reap a large financial return, and more of a focus on helping the startup scale efficiently.
Impact investing and innovation
Ira Ehrenpreis, managing partner at DBL Partners, and Paul Winer, senior principal at Clareo Partners, followed that discussion with insights into impact investing. Ehrenpreis, a director at Tesla, spoke at length about the influence of the electric car manufacturer, which has reopened a car factory in San Francisco’s south bay area that created several thousand jobs.
Ehrenpreis also raised the topic of diversity, noting that in DBL’s latest fund, seven of the first 10 investments were in startups led by women.
Given that DBL was competing with traditional VCs, the idea of impact investing may sound out of place, Ehrenpreis said, but sometimes – especially when it came to startups led by millennials – it was this differentiating factor that secured DBL the deal.
A growing CVC family
The first day moved towards its close with compensation executive Jody Thelander, founder of management consulting firm Thelander Consulting, speaking to Christine Leong Connors, managing director at JPMorgan Private Bank, about Thelander’s 2016 CVC Compensation Report.
A series of GCV’s signature unpanels brought the day’s proceedings to an end. At a gala dinner held that night, Claudia Fan Munce, former head of IBM Venture Capital, was awarded a lifetime achievement award (see report). She thanked delegates, noting that during her long career, she always felt closer to her corporate venturing family than many of her IBM colleagues.
The CVC family is growing – at the gala dinner, Tim Lafferty, GCV’s chief operating officer, welcomed the company’s newest member of staff, Janice Mawson (no relation to James).
With more than 16 years’ experience in the VC and startup communities, Janice Mawson will be working as consulting director for the GCV Leadership Society. She previously led US trade body the corporate venture group of US trade body the National Venture Capital Association (NVCA) and other business development initiatives. Mawson joins another recent hire, Nicole Idar Lee, who is now Global Corporate Venturing’s features editor and will oversee our monthly magazine as well as special reports such as The World of Corporate Venturing.
Day 2
Jeffrey Hayzlett on taking risks
“Nobody died” – perhaps an odd lesson to start the day with, but Jeffrey Hayzlett, author of Think Big, Act Bigger!, woke up the room with a tale of innovation in the printer ink cartridges industry that proved insightful.
Ink, Hayzlett noted, was the single most expensive liquid on the planet, more expensive than oil, champagne or penicillin. That was why the conventional business model is to sell the printer at a loss, and recoup the cash by setting steep prices for the ink. But when Hayzlett worked at photo company Kodak, the company decided to take a risk and sell the printers at a higher cost, and price the ink more cheaply.
The campaign that Hayzlett and his team came up with was shown in cinemas, but despite double-digit response rates, the campaign failed to generate customers – in the first weekend of the campaign, Kodak received just two text messages ordering printers. The problem, one team member noted, was that audiences turned off their phones when they entered the cinema.
The campaign initially lost Kodak millions of dollars, but when it went digital, it was successful. Hayzlett emphasised how important it was to take a chance on radical ideas. “We took a risk and it did not work out, but nobody died. Nobody died,” he said.
US leads in CVC investing
With the audience fired up by Hayzlett’s tale, Martin Haemmig, adjunct professor at Cetim, offered insights gleaned from his analysis of Global Corporate Venturing and PitchBook data.
Building on his report from the previous day on the US and China, Haemmig revealed that between 2012 and 2016, the number of investments by corporate venture capital units amounted to 4,289 for the US, 903 for Europe, 597 for China and 257 for India.
In the US, approximately half of corporate investors were domestic, whereas in Europe overseas corporations conducted more deals. In China the rise of domestic corporate investment had been dramatic, a trend reflected across the Asia-Pacific region, where there were 607 deals, of which 328 were conducted by domestic CVCs.
Globally, chip makers Intel and Qualcomm, industrial conglomerate General Electric and diversified conglomerate Alphabet led the charge for the number of deals between 2015 and 2016.
Ilya Strebulaev, professor of finance at Stanford University’s Graduate School of Business, complemented Haemmig’s data with an overview of a survey investigating how CVC units make decisions.
One of Strebulaev’s data points – 93% of corporate venturing respondents and 92% of institutional VC respondents thought unicorns were overvalued – served as a reminder of Tim Draper’s comment from the previous day that the venture capital industry was at an inflection point, and valuations would either shoot up or come crashing down.
Other insights from the survey include the following – CVCs tended to interact less with portfolio startups than with VCs, Strebulaev said. Also, while 23% of corporate venturing divisions lacked any financial incentive program, 66% of CVCs offered bonuses, and 19% offered carried interest (a share of fund profit).
More data will be available at the Global Corporate Venturing Symposium in London on May 23.
Microsoft Ventures’ expansion plans
For Nagraj Kashyap, January 26 marked the first anniversary of his tenure as head of Microsoft Ventures.
John Riggs, principal and partner at PwC, began an interview with him by joking that “one year is a long time”, and asked Kashyap what he had achieved so far. Kashyap rattled off a list – Microsoft Ventures had set up operations in Israel, expanded to New York and Seattle and had plans to open offices in an unnamed country bordering Europe. The unit had completed 19 to 20 investments to date, and grown into a diverse team, Kashyap said.
In a discussion on President Donald Trump’s rhetoric on protectionism, a hotly debated topic in the media, Kashyap struck a hopeful chord, noting that entrepreneurship was global and good teams would always be funded. Once funded, these teams would eventually want to expand to the US because it was such an important market, a reality that Kashyap said he did not see changing.
Kashyap also announced that after three years he was standing down as co-chairman of the GCVI Summit, and joked that sending him an email would suffice for volunteers wishing to be appointed his successor.
Diversity and VC
GCVI co-chairman Sue Siegel facilitated a discussion on diversity and venture capital that featured Trina Van Pelt, co-lead of Intel Capital’s Diversity Fund, Lo Toney, partner at Alphabet’s GV unit, Jessica Straus, vice-president of development at the NVCA, and Microsoft Ventures’ Kashyap.
Kashyap said CVCs had a distinct advantage over VCs because corporate networks tended already to be diverse, due to the multinational nature of most major CVCs, and to corporate policies that helped to strengthen diversity. VC networks, on the other hand, were traditionally more homogenous. White male investors could indeed help to ensure diversity – the crucial factor was empathy, Toney pointed out.
Diversity should not be defined purely on the basis of gender or ethnicity, some speakers said. Van Pelt said the $125m Intel Capital Diversity Fund, which initially targeted technology startups run by women and minorities, now also supported startups led by entrepreneurs with disabilities, for example. Van Pelt also said the drive to invest in startups led by diverse teams had been impressed on all Intel Capital staff, and was not a mission for the Diversity Fund alone.
Straus mentioned studies that had shown diversity was an economic advantage, echoing Kashyap’s words that “diversity is good for you”. Siegel recalled Peggy Johnson’s comments about Microsoft’s efforts to promote diversity of thought, and how that organically led to the creation of a diverse team. She concluded the discussion with a call to action.
“If not us, who?” Siegel asked. “If not me, who? We all think our human resources departments will change things, others will change things, but the reality is that it starts with us.”
Women trailblazers
Claudia Fan Munce, an adviser at investment firm NEA, Heidi Roizen, operating partner at DFJ, and Ann Winblad, general partner at VC firm Hummer Winblad, echoed many of the views voiced by the earlier panel on diversity.
Roizen recalled trying to secure an investment for her software startup in 1989. She received a good term sheet from a male investor, but he repeatedly called her “babe”, she said. Finally, she went to Winblad to seek investment. Many men were unaware of these incidents, Roizen said, and while such moments had become rarer, they still occurred. Munce expressed the hope that “once a man has a daughter, we do not need to teach you anymore – you will be an advocate”.
Winblad observed that the venture capital industry’s approach to diversity was uneven, as it was an unregulated sector, and would in all likelihood never be regulated. CVCs, on the other hand, tended to have policies in place to stop sexism in the workplace. Roizen observed that the audience in the room was at least twice as diverse as a typical audience at a venture capital event.
Global Government Venturing Leadership Society
James Mawson, editor-in-chief of Global Corporate Venturing, spoke about the Global Government Venturing breakout session held the day before. This invitation-only event welcomed about 20 government representatives from countries such as Australia, Austria, Belgium, Brazil, Canada, China, Germany, Ghana, Finland, the Netherlands, Russia, the US and the UK, as well as representatives from California and the UN.
One of the key points discussed during that workshop was the creation of a Global Government Venturing Leadership Society, which will act as a vehicle to connect CVC units to contacts within the governments of countries they wish to invest in. The attendees agreed either to serve as a point person or to try to find someone with whom local and international CVCs in their country or region can connect.
Paul Morris, corporate venture capital adviser at the UK Department for International Trade’s venture capital unit, has been elected president and will, alongside James Mawson, act as initial contact for those interested in joining the society. An update is forthcoming at the GCV Symposium in London in May.
Fintech and the future of Citi
Scott Joachim, chairman of the private equity group at law firm Fenwick & West, interviewed Vanessa Colella, who was recently promoted to chief innovation officer at financial services firm Citi and is also managing director and global head of venture investing and strategic growth initiatives at investment subsidiary Citi Ventures.
Fintech was a particularly exciting space for her sector, Colella noted, adding that until a few years ago, fintech did not exist because entrepreneurs on the US west coast did not understand the financial services industry, which is largely headquartered on the east coast, and did not realise it was ripe for disruption.
Colella stressed a key point that several panellists referred to throughout the two-day summit – a corporate investor needed to be strategic first and financial second.
“We do not invest in entrepreneurs who we think can help Citi,” Colella said. “We invest in entrepreneurs who Citi can help.” In addition to fintech, another sector of interest for Citi is healthcare, Colella said.
Fostering innovation at RBC
Lara Druyan, head of innovation at financial services group RBC, spoke to Patty Burke, partner in innovation leadership solutions at the Centre for Creative Leadership, about big data, predictive analytics, payments and regulation technology.
RBC was one of only a handful of CVC units in Canada, and the challenge had been adapting the bank’s culture to foster innovation. While RBC’s capital markets team in New York had been particularly supportive, Druyan said, other business units had not been quite as receptive, and figuring out which ones she should approach had been an important part of her duties.
L’Oréal: innovation by design
An aversion to innovation was not a problem that Sandrine Gadol, chief innovation officer at beauty products manufacturer L’Oréal, has faced. She spoke to Steve Barsh, chief innovation officer at digital health accelerator Dreamit, and explained how crucial it was for a company like hers to stay on top of the latest trends and products.
One example of a tech-enabled beauty product was L’Oréal’s My UV Patch, a wearable skin sensor designed to collect data on a user’s ultraviolet exposure. The technology, developed with the support of an unnamed startup, was one of many biotechnology partnerships the corporate maintained, Gadol said, which may come as a surprise to those who thought of L’Oréal simply as a maker of perfumes and creams.
BMW iVentures: nimble investors
Ulrich Quay and Uwe Higgen, managing partners at car manufacturer BMW’s iVentures unit, were interviewed by Gregory Heibel, partner at law firm Orrick.
BMW iVentures, which has four partners, could close a deal quickly – within two weeks, Quay and Higgen said – because the unit had a streamlined policy of requiring a simple majority of votes from partners. Strategic value to the corporate came before a financial return, though returns did matter, they said.
There were now eight areas of focus in iVentures’ portfolio, all car-related, and having successfully grown its investments, the corporate venturing team was aiming to raise a third fund in three to four years’ time.
CVC mega-trends
Thomas D’Halluin, head of US venture investments at airplane manufacturer Airbus, Jeff Herbst, vice-president of business development at graphics card producer Nvidia, and Ray Schuder, managing director at technology company HP Enterprise’s division HP Ventures spoke on a panel moderated by George Hoyem, managing partner at In-Q-Tel, the VC affiliate of the US intelligence community.
The panel discussed several emerging mega-trends influencing CVC investment, such as conversational artificial intelligence (AI), deep learning and Crispr, which enables gene editing.
Herbst noted that these kinds of trends had enabled Nvidia to gain exposure to the automotive and deep learning sectors. AI was the biggest transformation he had seen in technology, he said.
D’Halluin agreed that transformative technologies had extended the reach of corporates, generating opportunities for Airbus in the businesses of drones and satellites, for instance. Schuder meanwhile said the sheer amount of data the world was producing would eventually require a new kind of computing, one that HP was working to develop.
Qualcomm Ventures’s approach
Quinn Li, vice-president and global head of chip maker Qualcomm’s investment unit Qualcomm Ventures, spoke to Jordan Herman, partner at law firm Baker Botts, about IoT, VR, and the automotive sector.
Whereas RBC’s Lara Druyan had said earlier in the day that it was important to “keep your friends close and your potential future enemies closer”, Li said Qualcomm Ventures tended not to invest in startups that competed with the parent’s business.
HTC on virtual reality
Alvin Wang Graylin, China regional president of Vive at consumer electronics company HTC, spoke about the emerging importance of VR. According to Graylin, VR and AR would eventually merge into one product that would reshape many industries.
Vive had conducted studies that showed VR use in education dramatically increased students’ ability to learn, Graylin said. One study found that when the lowest-perfoming students used VR devices, they were able to outperform the highest achievers in the control group, whose members were given iPads and computers.
Gaming was merely the first step for VR technology, Graylin said. He foresaw a future in which VR and AR were spread across three areas – entertainment, education and enterprise. In the enterprise category, for example, companies such as Airbus and Tesla were already developing products.
SAP on scouting talent internally
Deepak Krishnamurthy, chief strategy officer at software company SAP, and Ram Jambunathan, managing director of the SAP.io Fund, spoke to Hank Barry, partner at law firm Sidley Austin, about the strategy behind the fund, which is active both within and outside SAP.
Krishnamurthy and Jambunathan explained how SAP.io worked as an internal fund – it regularly called for project ideas from employees to solve specific problems faced by the corporate. Out of these ideas, a shortlist of 25 was created, and following a pitch session, the top five teams entered a dedicated fellowship for three months.
The team members gave up their regular jobs at SAP for the duration of the fellowship. After three months, their progress was evaluated, and if it was deemed promising, the teams were then formally employed by SAP.io and officially left their former positions. They then entered an incubator and raised funding internally, through to series A stage, and if they warranted further scale at that point, rather than being spun into SAP, they went on to raise further rounds from third parties.
SAP.io is complementary to Sapphire Ventures, a VC firm spun out by SAP in 2011 that is now entirely independent.
Startup-corporate partnering
David Hite, managing partner at venture capital firm B37 Ventures, led a discussion on startup and corporate partnerships that featured Doug Coughran, CEO and founder of route optimisation software developer Foxtrot, and Bob Chernoff, senior vice-president and chief disruption officer at bakery company Bimbo Bakeries USA.
Delgates heard that the partnership between Foxtrot and Bimbo Bakeries USA was enabled by B37, and had allowed the baked goods provider to improve the efficiency of its network. Foxtrot’s algorithm made 50 to 60 adjustments to routes on a daily basis, taking into account a range of factors, including the legal requirement to keep each driver on the road for no more than eight hours.
Harnessing innovation through strategic deals
Busy Burr, vice-president of innovation and head of insurance company Humana’s CVC arm Humana Health Ventures, Shankar Chandran, managing director and head of Samsung Catalyst Fund at the consumer electronics company, and Mary Kay James, vice-president and general manager at food producer Tyson’s corporate venturing unit Tyson New Ventures, joined a discussion led by Kenneth Gatz, chief executive of business collaboration and workflow tools provider Proseeder on the importance of strategic deals.
The panel reiterated the view that a CVC unit needed to be strategic first and pursue a financial interest second. Where panellists diverged was over the time period they felt was relevant to making strategic decisions. James said she needed to look as far ahead as consumption trends in 2050, while Burr observed that her timeframe was more immediate.
Chandran said he was looking further ahead as well, and projected a future in which automobiles would look very different thanks to AI and a proliferation of electric vehicles. Samsung was already active in the electric car industry – last month, the company had launched a battery that enabled electric cars to travel up to 500km on a 20-minute charge.
Case study: Dollar Shave Club
Mike Jones, chief executive of Science, described how the incubator helped create personal grooming product company Dollar Shave Club, which was acquired by conglomerate Unilever for $1bn in July 2016. Jones said he intentionally kept funding for startups sparse, to induce entrepreneurs to come up with innovative solutions they might not otherwise generate if they were swimming in cash.
CVCs in corporate decision-making
Bonny Simi, president of airline Jetblue’s corporate venturing unit Jetblue Ventures, Swati Dasgupta, director of venture technology at industrial group Siemens, Austin Noronha, managing director at conglomerate Sony’s division Sony Growth Ventures & Innovation, and Duncan Logan, CEO of technology campus Rocketspace, took the stage with Michael Fox, GCV’s Silicon Valley emissary.
The panel considered the importance of a corporate’s various business units in the decision-making process. Dasgupta noted that Siemens tended to secure a business unit’s mandate to invest in areas where the company was already present, while other areas that fell outside the corporate’s sphere of activity, such as robotics, required no such consent. Simi and Noronha agreed, commenting that stepping on an existing business unit’s turf could prove to be tricky.
Corporate partnering in blockchain
Toby Lewis, chief executive of data provider Novum Insights and contributing editor to Global Corporate Venturing, moderated a panel on the importance of metrics and data in corporate innovation.
The panel consisted of Evangelos Simoudis, managing partner at investment firm Synapse Partners, Trevor Owens, CEO of enterprise software company Javelin, Phil Graves, vice-president of corporate development at clothing company Patagonia, and Tracy Isacke, mnanaging director for corporate relationship management at financial services firm Silicon Valley Bank.
Lewis noted that his company Novum Insights was currently studying the rise of blockchain, a technology expected to cause widespread disruption in the financial industry, and may also prove a fundamental influence in other sectors.
As it was the final event at the summit, panellists took the opportunity to reflect on the past two days. Isacke said Sue Siegel’s opening remark that “the time is now” resonated most with her, bringing the summit – which raised $2,700 for charity, matched by GCV – full circle.
Opportunities in fintech and insurtech
Russ MacTough, managing director of Liberty Mutual Strategic Ventures, the corporate venturing arm of the US-based insurance provider, hosted the breakout session on fintech and insurtech.
In his talk, MacTough presented data on overall trends in fintech and insurtech investments over the past few years. He dedicated part of the session to explaining what insurtech actually meant, describing it broadly as any technology that helped streamline internal business processes within insurance services, be that agent and broker systems, or carrier systems.
MacTough said: “Savvy entrepreneurs and investors have built huge business over the years selling into this slow-adopting gigantic market.”
Although insurtech had been around for a long time, it had remained off the radar of Silicon Valley investors until fairly recently, MacTough said. Taking a value chain perspective, he described some companies in the field as old-school players, “typically big businesses which have been selling large footprint enterprise software licences to insurance carriers for years”.
The new wave of insurtech companies had been heavily, albeit not exclusively, focused on business processes that could be digitised and sold as services to insurance carriers.
But there were many issues that startups in the field faced due to a lack of insurance expertise among entrepreneurs, MacTough said. Another stumbling block was the reticence of insurance carriers to place data in the cloud and share it.
Nevertheless, large insurance providers were interested in new ways to improve customer service, so there were opportunities for applications that improved customer acquisition and retention, MacTough pointed out.
A subsequent interactive discussion with the audience considered the rise of the internet of things, smart homes and smart cities and their implications for insurance providers.
Currently, insurance companies needed to confront a number of critical questions, such as what would be the most efficient way to place data-gathering devices in people’s homes, and if that were possible, what were the implications for underwriting, how would data-gathering insurers deal with the replacement cycle of such high-tech products, and so on.
Finally, MacTough and other corporate investors from the audience exchanged views on the potential role of corporate venturing arms as data-sharing bridges between startups and large insurance companies. Having corporate partners in the same sector could be an advantage for startups whose technologies or services needed guidance and help on regulatory matters, MacTough said.
