My year as chair of the NVCA’s corporate advisory board has built on the work of my immediate predecessors, especially Greg Foster, who did so much to get this group to talk less and show more action.
This has been important as corporate venturing teams are still seen as a poor cousin of venture capital (VC) in general. I found this when I joined Unilever’s team in 2005 – VCs were wary of corporate venturing’s involvement.
This was a legacy of the reputation corpo-rate venturing had in the dot.com bubble of being the last in and first out of an economic cycle. VCs’ attitude has been one of caution and nervousness towards corporates. This often leads to corporate venturing groups only seeing deals late as a way to fill out a round.
It takes long-term pedigree from firms like Intel and Novartis to build the necessary trust to share great deals.This past year, however, has seen the mood about corporate venturing become more positive. One of the central challenges for any company now is to face the issue of growth.
Compared with the past decade it has become really clear that every company needs to consider how it innovates and its openness to different ways of doing this.
Ten years ago firms were more concerned with consolidation and efficiency. And firms realise they cannot do it all themselves.
This has led to three things. First, a 25% rise in the number of corporate members at the NVCA in the past year.
More have come to the party and are intent on staying as growth and open innovation become long-term goals. The rules of the game require corporations to be aware that if they start a corporate venturing unit it is a 10 or 20 year commitment. Closing in three years is worse than not starting at all.
Second, how corporate venturing interacts has been changing. Partnerships and alliances and findingways for small companies and corporations to work together is a really important part of the whole VC model. People realise that 75% to 80% of returns from VC-backed companies comes from a sale not a flotation, so help for small companies in learning how to dance with the elephant is important.
Building relationships with corporations helps the acqui-sition multiples and in selling businesses. It is a critical part of the exit planning and execution and one corporate venturing units are well-placed to provide.
Third, as corporate venturing money and ambition come to the forefront, units need the skills of people who have done it before. This transfer of talent is also part of a wider requirement for corporate venturing units to think about the career path they offer people.
The needs for corporates to learn new capabilities in venturing combined with the challenges that traditional venturing is offering provide an opportunity for thinking about talent in a new way.
As chairman, I see this as a vital call to action for the NVCA and the corporate venturing community.
These three issues, among others, were evident in the NVCA’s recent Corporate Venturing Summit in Boston, truly a highlight of the past year and a testament to Steve Socolof at New Venture Partners and the team at the NVCA who put this event together.
Finally, an additional challenge for the future is how regional bodies give an effective voice in the globalisation agenda. VCs are best when local but corporations offer the global glue in venture.
Corporate venturing over the next two to three years has to have an effective voice in this debate and, as many groups are now becoming truly global in their reach, their ability to add value to the broader venture community via the links they have around the world will bring a truly competitive edge.