Last year, corporate venturing groups (CVGs) represented $1.9bn, or 9%, of the total venture investment in the US, according to data collected on behalf of the National Venture Capital Association (NVCA).
Although this is below the peak reached at the turn of the millennium, corporate venturing is an important constituent of the venture investing ecosystem and in some areas, such as clean-tech, were even more influential. CVGs provided 29.1% of all dollars invested in clean-tech and were involved in 14.3% of all deals across all industries.
CVGs also tend to punch above their weight in the deals they choose to invest in. Deals where CVGs participated contributed 33.1% of that deal on average and they have also invested in 32 of the 50 US states.
Their importance has led the NVCA to provide an alignment of focus on three categories – partnership, globalisation and talent.
The trade body has set up a CVG outreach subcommittee to develop plans and tap into the broad venture capital community in all three areas. There is an imperative for partnership for start-ups between CVGs and others because of the dominance of mergers and acquisitions as the exit route for entrepreneurs and as the time to exit has doubled on average over the past decade.
Corporations can also offer a potential source of non-dilutive capital and a mechanism for its portfolio company to enter the market and they also have a global reach. On the subject of talent, there is likely to be a continued reduction in the number of venture firms due to the poor fundraising environment.
This puts into question succession plans and usually forces a move to smaller funds – both of which can affect the number and type of personnel needed at independent venture capital firms.
It also creates the ideal opportunity for talent to view CVG as a career opportunity just as competition accelerates for corporate venture investors to hire the best people and strike the best deals. The choices for partnerships are growing as corporations are focused on growth and innovation.
Since June last year, 10 corporate members have joined NVCA. They are:
l AOL Ventures
l Citigroup
l EMC
l GM Ventures
l Illumina Ventures
l Merck Global Health Innovation Fund
l National Semiconductor
l Nike
l SAP Ventures
l SK Telecom Ventures
The NVCA has been committed to corporate venturing and held its successful CVG Fall Summit in Boston in November where more than 75 CVGs attended. The NVCA has also created a frequently-asked questions document (FAQ), which is now available on the CVG portion of the NVCA website following its complete overhaul. Members provided answers regarding CVG models, reporting structures, compensation and strategic valuation.
There is also more readily-accessible information relating to a variety of subjects and tools including membership information, events, FAQs, members-only online discussion forum, data and benchmarking benefits, investment statistics, a library of article and publications and more.
This year, the CVG will deliver on its strategic vision to help the CVG industry.
NVCA’s Corporate Venturing Group executive committee
Lisa Frankovitch, chairman, Adams Capital Management
Steve Socolof, incoming chairman, New Venture Partners
Phil Giesler, immediate past chairman, Physic Ventures
Liaisons to NVCA board of directors
Sherrill Neff, Quaker BioVentures
Robert Goodman, Bessemer Venture Partners
2011-12 advisory board
Gerald Brady, SVB
Claudia Fan Munce, IBM Venture Capital Group
Annette Finsterbusch, Applied Ventures
Constance Freedman, Second Century Ventures
Christopher Kay, CitiVentures
John Hull, Nike, Inc.
Mary Kay James, DuPont Ventures
Elaine Jones, Pfizer, Inc.
Jacqueline LeSage Krause, The Hartford
Dan’l Lewin, Microsoft Corporation
Alexander Marquez, Intel Capital
Kevin McElgunn, The Dow Chemical Co.
Matt McElhattan, Chevron Technology Ventures
Paul Weiskopf, Adobe Systems, Inc.