For a few days at the end of May, Grosvenor Square was the centre of gravity for corporate venturing. At the Global Corporate Venturing Symposium, the buzz was evident. Corporate venturing is 30% of all venture capital.
Never before have corporate dollars been so relevant, so significant, and so valuable. As of the first quarter of 2014, 83 unique corporate venturers were in a deal, to create an eight‐quarter high – a 73% increase.
So it was great to be part of this gathering. Boom times aside, in his opening address, Global Corporate Venturing’s editor‐in‐chief James Mawson was quick to point out that it takes time to prove your worth. In talking to 1,000 corporate venturing units during the year, Mawson said the “general trend is that corporates are starting to see strategic value”. Maybe corporate venturing is at a tipping point.
Intel Capital’s Arvind Sodhani said corporates will “see losses before gains” and needed to be patient and figure out what returns they wanted from their investments.
Mawson quoted Silicon Valley Bank analysis to demonstrate how much activity is up, not just in volume but also in sustainability and longevity – more, bigger, around for longer – and how the top 50 corporate venturers are in a much higher share of what are listed as the “top deals”.
Our president and CEO, Greg Becker, talked about trends in innovation, and about what we call “innovate or die”, which is, of course, one of the motivations for corporates to execute a strategy to innovate on the continuum “incubation, investment and acquisition” to deliver returns to the bottom line in a way similar to research and development (R&D). Some say corporate venturing is the new R&D – becoming a profit centre, both strategic and financial.
There is nothing like a healthy dose of disruption to motivate robust action toward corporate venturing. Doing the same thing in the face of intense competition is indeed pointless. New kids on the block are various and numerous, while the leaders still lead. I presented Sodhani and his team with the Global Corporate Venturing Unit of the Year award. Not everyone can be an Intel Capital, but it is good that we can learn from their insights, their wins and their misses.
Clearly, we are witnessing an unprecedented level of activity by corporates in venture investing, or, as Mawson would put it, a form of golden age.
Fresh from the symposium, we held our UK Innovation Day. This also reinforced our belief that corporates are attractive to start ups. Sixty of the best and coolest companies we are working with – from the UK, France, Germany and all over central and eastern Europe – pitched their business to corporates from various sectors of the industry and to venture capitalists (VCs), presumably open to co‐investing with strategics. The audience of VCs and corporate venturers were impressed with the quality of the companies pitching. The 60 companies presenting raised more than $1bn. What a fantastic testimony to the innovation economy in Europe.
For start ups, access to capital may still be top of mind, along with access to customers and channel partners. In corporate venturing land, access to talent is increasingly a feature of the dialogue.
Compensation was also part of the conversation. Carried interest – a share of fund performance – is still something of a rarity within corporate venturing, whereas in the VC world it is the norm. A 2012 survey by JP Morgan and J Thelander Consulting found that financial VCs receive an average 23.9% of the profit generated by their deals. Without this, it is going to be difficult to attract top investment talent from VC to corporate venturing.
Intramezzo interviewed Becker on the topic of human capital (watch the video). This forms one part of a series of interviews with Rahul Sood of Microsoft Ventures and Claudia Fan Munce of IBM Venture Capital.
Two more highlights for me – reclaiming some of my lost UK-based youth while dancing at a new nightclub in Kensington and Chelsea, and finding Uber drivers that knew how to find their way around bad London traffic.
Another highlight at the symposium was moderating the panel on sustainability. The focus of the panel discussion was mostly on public‐private partnerships – government, academia and corporates – and new models emerging. We heard that there was a major gap between investment in research universities ($35bn) and commercialising that intellectual property to create viable spin‐outs. We also heard that the largest Japanese corporates have come together to deploy $20bn into tech start ups as a consortium. Japan, China, and the Asia region in general are hugely active now. While I love Asia, I think I may love London more.
Thanks for the ride, Global Corporate Venturing Symposium. Until next year.