In one of the opening presentations, Young Sohn, corporate president and chief strategy officer of consumer electronics producer Samsung, was celebrated on stage as the new chairman of the GCV Leadership Society. He replaced Wendell Brooks, president of Intel Capital, who had completed his two-year term.
Sohn oversees Samsung divisions including Samsung Catalyst Fund, Samsung Venture Investment and mergers and acquisitions, and he stressed that they ultimately represent one brand with the same objectives.
Reflecting on the “data is the new oil” idea, Sohn said Samsung focused on three trends: digital coin, biotech and semiconductors – more specifically, areas such as gene sequencing, lasers and quantum computing – that can solve issues surrounding sustainability.
Sohn noted: “We are responsible for our brand, and sustainability will be more important going forward. Entrepreneurs can have a big and positive impact on our world, and I hope we can encourage and educate more startups to attain these goals.”
Above: Young Sohn
Kaloyan Andonov of Global Corporate Venturing then presented a brief overview of data points from the World of Corporate Venturing annual review to show how important the industry had become over the past decade.
Andonov highlighted how corporate investors had come to play a significant role on the overall scene, and as such investors now participated in about 15% of all disclosed dealflow, compared with 6-7% in the beginning of last decade.
However, he noted that the majority of corporates (77%) had a track record of less than 10 years, which implied the decade they had left behind needs to be seen as a milestone for learnings.
Looking forward, the further professionalisation and gathering of experience for CVC would be crucial in order for them to survive and thrive, he concluded.
Separating business partnership personnel from the rest of the CVC team is one route to ensuring innovation strategy responds to the priorities of the corporate’s client base, according to Lisa Lambert, chief technology and innovation officer at National Grid Partners, the corporate venturing arm of energy supplier National Grid.
Deploying investors alongside business development could mean conflating deal sourcing with other strategic priorities, which in National Grid’s case included liaising across different operational units in energy segments such as heat, electricity and water.
“Most CVC firms have their investors and business development in the same department, so they are [synchronously] sourcing deals and moving investment and making sure there is a strategic connection for those customers,” Lambert observed.
Lambert spoke on a panel with Debbie Brackeen, chief innovation officer at insurance firm CSAA, whose corporate venturing subsidiary is Avanta Ventures.
The panel was chaired by Ken Gatz, chief executive officer of dealflow management platform Proseeder.
Brackeen expressed a preference for having strategy and corporate venturing under a single roof to avoid diminishing the unit’s relevance to the core business.
However, she was also contemplating making CVC investment and business development functions more distinct, having recently relocated Avanta investors to Mountain View, California away, from its Walnut Creek headquarters.
CSAA anticipated a major business shift as the auto insurance segment, responsible for the bulk of its present trade, waned thanks to carsharing and e-mobility initiatives.
“We have had some success [in terms of business development],” Brackeen added. “One of our portfolio companies, Cape Analytics, [a satellite aerial imagery analysis business] has technology-critical for how we manage our business in terms of accurate underwriting, tracking change over time and how we notify the homeowner.”
Rob Coppedge, chief executive of Echo Health Ventures, a joint venture by care provider Cambia Health Solutions and health insurance supplier Blue Cross Blue Shield of North Carolina; Tom Rodgers, senior vice-president and managing director of McKesson Ventures, the CVC division of pharmaceuticals distributor McKesson; and Bill Taranto, president of pharmaceutical firm Merck & Co’s Global Health Innovation Fund (GHI), then drilled down into healthcare-focused CVC structures and how they had achieved success.
Julie Murchinson, former chief executive of healthcare events and data provider Health Evolution and adviser for VC firm Health Velocity Capital, opened the session asking the panellists about the relationships the CVC units had with their parent companies.
At Echo Health Ventures, the team reported to boards of the two parent companies and the chief executives and chief financial officers additionally served as connection points.
Coppedge said: “We have a team of people who are the connective tissue between our deal sourcing and our market activities, back into the workflow and life of our parent company.”
Rodgers and his team at McKesson Ventures reported to the head of strategy but had dotted lines of governance to the CEO and chief financial officer. The strategy team built bridges between McKesson Ventures and other McKesson business units.
At Merck GHI, the CVC team reported to the chief executive. Taranto said that his team’s evolution with their parent company had changed a bit – while the team used to be quite independent, it is now more aligned and found tools and applications in which to invest in the best interests of the company.
Earlier, Taranto, who has been president of US-based pharmaceutical group Merck & Co’s CVC fund since 2010, spoke with James Mawson, editor-in-chief of Global Corporate Venturing, on what longevity means for a CVC unit.
Above: William Taranto
A GCV Powerlist mainstay who came in seventh last year, Taranto has been managing Merck & Co’s $500m evergreen fund Global Health Innovation Fund since its inception.
Echoing the words of this year’s Global Corporate Venturing & Innovation Summit co-chair, JetBlue Technology Ventures’ Bonny Simi, Taranto said talent acquisition and retention were crucial for a CVC fund’s survival.
“We are structured independently [from the parent organisation], so there is a lot of creativity and the team enjoys building things,” he said. Though the corporate parent was ultimately responsible for tackling this issue, GHI offered training and continuous education for the team members.
Taranto continued: “I am fortunate to have a team that has suffered little change for the past 10 years – that is really a success.”
He added that for an evergreen fund such as GHI that needed to be self-efficient, he liked to ensure smooth and effective communication with the parent company. “For both strategic and financial goals, the corporate organisation has to be involved,” he concluded.
This was seconded by Scott Lenet, co-founder of Touchdown Ventures, a VC firm which manages funds on behalf of corporates, and Mike Redding, senior vice-president of corporate strategy and head of Accenture Ventures, management consulting firm Accenture’s corporate venturing unit. They suggested corporate venturers can connect and align with their corporate parents by telling executives a compelling story.
Lenet and Redding agreed that CVC arms could improve connections with the corporate C-suite team by telling a double-edged story of financial and corporate success. Corporate venturers could quantify strategic key performance indicators as a measure of what success would look like to corporate executives, they noted.
Above: (L-R) Scott Lenet & Mike Redding
Ian Goldstein, partner at law firm Fenwick & West, a platinum sponsor for this year’s GCVI Summit, interviewed Simi, president of JetBlue Technology Ventures (JTV), the CVC arm of US-based airline operator JetBlue Airways, how she had established the strategies, mandates and goals. Simi responded that JetBlue wanted someone who had experience in the VC industry – JTV managing director of investments Raj Singh – and someone from the parent corporation itself – Simi.
“If JTV can have an impact on the parent organisation by just a tiny percent, think about the value for JetBlue – so that is how we think about it, we uphold both strategic and financial disciplines,” Simi noted.
Above: (L-R) Ian Goldstein & Bonny Simi
Part of this impact comes from the technologies seen and part from new business models. Omkaram Nalamasu, senior vice-president and chief technology officer for chip and display designer Applied Materials (Amat), and president of its CVC arm, Applied Ventures (AV), told the audience about the corporate’s and AV’s strategies surrounding deeptech.
As a CVC investor, Nalamasu said AV sought to add value to co-investors and startups leveraging Amat’s $14.6bn of revenue, $2.1bn R&D spending, 13,300 patents – more than four patents per day – and over 22,000 employees in 18 countries in 2019.
Founded in 2001, AV was one of the most stable CVC units, according to Nalamasu, who said: “We provide patient capital and have invested in 85 companies, investing up to $50m per year globally.”
The unit’s investments spanned 13 countries, with joint investment funds in South Korea and New York, with others in progress. With “lab-to-fab” scaling and Amat’s global network, AV helped portfolio companies grow.
Nalamasu added that the unit’s investments focused on identifying materials engineering high-value problems, investing in suppliers, innovating new business models to meet the needs of new ecosystems.
One example of how AV has been working with entrepreneurs and startups was internet-of-things technology developer Adesto Technologies, which the unit backed from series A through to initial public offering, also bringing in syndicate partners.
“We have had 35 exits – of which three IPOs happened in the past 18 months,” noted Nalamasu.
Shankar Chandran, senior vice-president, managing director and head of Samsung Catalyst Fund (SCF), an evergreen CVC vehicle for consumer electronics manufacturer Samsung, later had a discussion with Arvind Purushotham, managing director and global head of venture investing at financial services firm Citi who oversees its corporate venturing arm, Citi Ventures.
Moderator Greg Heibel, a partner at law firm Orrick, a platinum sponsor for this year’s GCVI Summit, asked Chandran and Purushotham to share how their respective CVC units identified innovative technologies.
Chandran reports to Samsung chief strategy officer Sohn. Samsung sought to invest in innovative developers of healthcare, insurance, financial, mobility and quantum technologies that leverage artificial intelligence, according to Chandran.
Purushotham said Citi Ventures targeted the intersection of financial services and technology. The unit had a broad mandate on how to define the strategic rationale and incorporated domains such as payments and work management that were directly relevant to Citi’s main businesses, as well as security to help keep the bank and customers’ data safe.
The panellists agreed that CVC initiatives took time to build credibility and move into a new industry. Purushotham mentioned that Citi Ventures had backed online payment technology provider Square to gain traction in the space.
Chandran added that portfolio companies provided access to new data insights and helped the CVC unit understand new market segments such as automotive and mobility.
Samsung had three main businesses – smartphones, consumer electronics and semiconductors – and to cover them, it had three venture funds – Chandran’s SCF, focused on new sectors; Samsung Venture Investments, which helped business units explore mid and later-staged companies; and software, services and ecosystem-focused Samsung Next that facilitated hardware-minded Samsung to learn more about this area.
Citi also launched the $150m Citi Impact Fund earlier this month. It focused on diversity and inclusion, especially on women and minority-founded startups that created a positive impact on society. Purushotham said: “We support entrepreneurs who are trying to bring tech to sustainability, workforce being replaced by AI, smart cities and financial inclusion.”
Both Purushotham and Chandran said their teams aimed to foster United Nations’ sustainability development goals, promoting diversity, financial inclusions and healthcare.
Above: (L-R) Arvind Purushotham, Shankar Chandran, Greg Heibel
Patty Rowland Burke, innovation and venture catalyst for the Centre for Creative Leadership (CCL) and its Commercialisation and Innovation group, gave an introduction on women leadership in the business world.
CCL was a 50-year-old nonprofit organisation that provided training and courses for professionals in the leadership position. It had a globally managed network of coaches and faculty in the industry and teams of full-time dedicated researchers committed to creating results, she said.
Burke continued: “We continue to lead and innovate in cutting-edge solutions to deliver a pioneering experience in leadership research and education.
“Most of the companies that we have been working with are pioneers of diversity, equity and inclusion with leadership development.
“Like many organisations, we are undergoing digital transformation. We have taken many of our five-day immersive leadership programs and turned them into leadership development content, and turning them into digital programs.”
Sapphire Ventures managing director Steve Abbott took to the main stage at the GCVI Summit with a fascinating account of his firm’s evolution since spinning off from software company SAP in 2011.
Speaking to Tami Hutchinson, senior managing director of Intel Capital, Abbott said SAP was always a “very important partner”, but had become even more aligned in light of flourishing US venture markets in recent years.
VC had become commoditised as a result, prompting each firm to differentiate itself from its peers, making the SAP connection valuable leverage in today’s climate, Abbott argued.
“We moved toward that relationship because our focus on enterprise technology differentiates us because SAP has at last count 920 of the 1000 largest companies, which helps us take on software in some kind of meaningful way. That can be helpful in conducting due diligence and ensuring post-deal value add [for instance],” he said.
Despite maintaining good relations with SAP, Sapphire Ventures now operated as a wholly-independent VC firm with $4.5bn under management.
Later, Abbott tipped data analytics for sports media and entertainment as one of the best software-related bets.
“These sectors are growing roughly two or three times faster than GDP, whether in the US, Europe or Asia, and data analytics is starting to play a large role,” he said.
“You have trillion dollar markets where people are spending their discretionary income, for example sports teams or large footwear companies, and yet they tend to be depending how you look at it three to seven years behind how analytics is used in, for instance, the tech space,” he concluded.
Other leaders also explored the opportunities across different sectors and around the world. David Hayes, Diana Grauer and Avra Durack tackled the challenges around mobility and energy, while John Suh, George Kellerman and Tony Cannestra discussed the mobility sector and how investments needed to go beyond the core business.
BP Ventures, Schneider Electric Ventures, Mitsubishi Chemical Holdings and Denso introduced some of their portfolio companies across areas such as construction and distributed grid management.
One of the concurrent tracks on the second day featured innovator showcases that spanned across AI and data-driven climate, chemicals and transport transformation.
University of California pitching competition
Rising Stars & Emerging Leaders
The talking points
Brazil’s VC on the global radar
Thierry Heles, editor, Global University Venturing
Rodrigo Menezes, partner at law firm Derraik & Menezes Advogados, hosted a panel on Brazil’s ecosystem featuring Rosario Cannata, investment manager at EDP Ventures, the corporate venturing arm of energy utility EDP, and Flavio Pripas, corporate venture officer at VC firm Redpoint eVentures.
Mendezes kicked off by asking: “Why are we only now on the global radar and why should we remain there?”
Pripas explained that the market was very new and Redpoint had only started investing about 15 years ago. Things started to move quickly after that, he said, and several startups had started expanding internationally after successfully scaling in the domestic market.
A challenge that had been solved, Pripas continued, was that of follow-on capital, of which there essentially was none even five years ago. Today, he continued, some startups were growing as much as 100% year-on-year.
Cannata similarly noticed recent changes, noting that over the past two years he had had weekly meetings with corporates aiming to set up local investment units. Corporates were keen to access innovation and they were coming around to the idea that VC was
the most efficient way of achieving this goal.
Pripas pointed out that Brazil had celebrated five unicorns before many other large economies, such as Germany, and revealed that his fund counted both domestic and multinational corporates as limited partners.
Multinationals, he explained, were particularly interested in entering Brazil, which was a big market but not an easy one to penetrate due to challenges such as logistics. Local startups were well placed to help corporates solve such issues, he declared.
Cannata agreed that Brazil was an important market for his Portgual-based parent company, but the motivation to set up local offices was also influenced by a wider trend that’s meant Brazil-based startups raised three times more capital in 2019 then even in 2016.
Both Pripas and Cannata denied that unicorns or the increased availability of capital had led to inflated valuations. Cannata explained: “There are not many investors in Brazil, so while they are getting more competitive it is nothing like Silicon Valley and the valuations are still reasonable.”
When asked by Mendezes which changes they foresaw in the 2020s, Cannata had a brief and perhaps unsurprising answer: there would be many more CVC units.
The advanced vision of Toyota AI Ventures
Callum Cyrus, reporter
Software might be eating the world but cars have joined the menu. Automotive needs to become high-tech before technology supplants it, according to Jim Adler, founding managing director of carmaker Toyota’s early-stage AI Ventures unit.
Adler was interviewed by Sandi Knox, counsel for emerging companies and VC at law firm Sidley Austin.
Since launching in April 2017, Toyota AI Ventures had assembled $200m in funding and a 27-strong portfolio, guiding the parent company towards potentially disruptive early-stage technologies.
Citing his experience as a startup founder, Adler said he had learned to effectively think of new enterprises as market experiments.
“If this experiment pans out then we are going to learn something, or we may buy you if you do. I think that is really what startups are, they are experiments in the marketplace to figure out what might work and what might not,” Adler said. “Corporations are not very good at that. They are risk-averse and they do not like to fail.”
Adler also evoked the maxim of Indianapolis 500 race driver Rick Mears when he argued corporate business units were concerned with finishing first, while startups were focused on “first finishing” – that is, surviving.
Indeed Toyota AI Ventures had tried to avoid involving internal business units in its dealmaking process, in light of the likely mismatch between startup and corporate perspectives.
“We absolutely tap them for expertise and due diligence, but we do not let them in until after the close. Then you have a whole platform that does matchmaking between the startup and US activity in the business unit,” according to Adler.
“That works out really because as the startup grows, that balance sheet orientation starts to drive more for P&L orientation, right as the company matures.”
5G takes off for telecom 2020
Liwen-Edison Fu, reporter
Chris Bartlett, head of Verizon Ventures, a CVC arm of Verizon, and Alex Villela, a managing director for Qualcomm Ventures, the mobile semiconductor technology producer CVC unit, were interviewed by Dave Flanagan, senior managing director of Intel Capital, the corporate venturing division of chipmaker Intel, on the development of 5G technology.
Bartlett said the impact of 5G would be larger than previously believed but would also take longer to develop than expected. Verizon is already building a 5G network to help devices and networks to connect, he said.
Bartlett predicted 5G would start gaining traction in 2021 and the following year would be even more important for the technology. Verizon Ventures was investing in companies with foundation tech for 5G, as it was a strategic topic for many chief executives and chief innovation officers across the telecommunications industry.
The sharing economy was born amid a 4G backdrop and Villela said 5G would enable other types of opportunities, leveraging artificial intelligence to facilitate the connection between smart devices.
Villela gave the example of games, as consumers could have a richer experience through immersive reality. His unit launched a $200m vehicle, Qualcomm Ventures 5G Ecosystem Fund in October 2019.
Bartlett agreed and said the focus would shift from virtual to augmented reality thanks to 5G technology.
Verizon Ventures’ investment activities could be a proxy, allowing more efficient connections – initially in the industrial sector, but increasingly more on the enterprise and supply chain sides. He added: “5G would enable industrial internet of things, real-time analytics and faster decision-making.”
Data centres could be brought into the telecommunications world, according to Villela, who mentioned the 5G application layer being developed by wearable tablet producer RealWear, Qualcomm Ventures’ portfolio company.
AI’s big bang
Bjorn Sunde, reporter
Jeff Herbst, vice-president of business development and head of Nvidia GPU Ventures, graphics technology producer Nvidia’s corporate venturing arm, moderated a presentation in which Jonathan Cohen, senior director of artificial intelligence (AI) software at the parent company, and Scott Stephenson, co-founder and chief executive at artificial intelligence technology developer Deepgram, focused on speech recognition.
Cohen and Stephenson said there were three problems in conversational AI technology, including speech recognition, natural language processing and achieving a response that sounded like a natural voice with intonation – and that speech recognition alone was not enough for a company like Deepgram to be built on.
Stephenson said that there were two worlds developing in speech recognition. Most were aware of the consumer world which included AI on a phone to look up a recipe or the weather. Many were however less familiar with the business world, where companies were discovering needs for speech recognition software, including real-time conversation and simultaneous feedback.
Although Stephenson said a lot of hurdles to conversational AI had been removed and awareness of the technology had been brought to market, many problems with speech recognition software were unresolved. He said discovering the answers to all of the unknowns of speech recognition was difficult, but that there was value in each piece of the puzzle that was solved.
In specific sectors this can create opportunities. Renee Yao, global healthcare artificial intelligence startups lead at Nvidia, hosted an interview on the direction of AI in healthcare with Scott Barclay, partner at VC firm Data Collective; Fabien Beckers, founder and chief executive at medical imaging technology developer Arterys; and Chakri Toleti, chief executive and founder at smart device company Care.ai.
Yao asked why it was taking a long time for AI to infiltrate the healthcare industry.
Toleti said healthcare providers were focused on providing care and new technologies needed to reflect this mentality and become part of providers’ workflows.
Beckers agreed and added that workflows had to be proven and information technology support and regulatory compliance in place before implementing AI applications in a healthcare provider setting.
Barclay stated that validation was another hindrance to AI applications in healthcare, adding that the number of applications that were being proven with real data in controlled settings was strong, while the validation of data collected at multiple sites with multivariable settings was poor compared to those with controlled settings.
In-Q-Tel managing partner George Hoyem discussed disinformation campaigns carried out through artificial intelligence and machine learning technologies in recent years with Graphika CEO John Kelly and University of California Berkeley professor Hany Farid.
Diversity and inclusion of women, ethnic minorities and LGBT people
Kaloyan Andonov, reporter
The second day of the GCVI Summit also featured a special panel discussion on diversity and inclusion, which GCV and its GCV Leadership Society are trying to promote across the CVCl community.
The panel included Gus Warren, managing director at Samsung Next, a venturing arm of electronics manufacturer Samsung; Tracy Isacke, managing director at Silicon Valley Bank; Frank Klemens, managing director at DuPont Ventures, the venturing subsidiary of chemical producer DuPont; and Brittany Williams, deputy chief of staff at chipmaker Intel’s investment unit Intel Capital.
Isacke said that the purpose of the panel was to “make people come together to do something”. Isacke and Warren mentioned how they established the subcommittee on diversity and inclusion of the Leadership Society and formed a plan to suggest guidelines on how to increase diversity within CVC teams and dealflow.
The panellists relevant statistics highlighting the pressing need for change in terms of diversity and inclusion in the venture community. Klemens noted that the LGBT community was one of the hardest minority groups to identify and cited a study that 12% of VC funding went to LGBT prople but they chose not to identify themselves.
“It is a group of people you do not know exists, because they do not always openly identify,” he said.
Isacke and Warren cited another study, which said 11% of partners, general partners and managing directors at traditional VC firms were women and 71% of traditional venture firms had no women partners.
Williams added that less than 3% of the $40bn of VC investments in 2017 went to black or other ethnic minority-owned startups. At the same time, Hispanic founders made up less than 2% of those receiving funding and those from the Middle East totalled less than 3%.
The panellists also presented arguments as to why CVCs should be concerned about diversity, equity and inclusion (DE&I). Williams noted that it provided access to new markets and that “the US Census estimated that by 2045 the number of people of colour will grow by 74%.”
Warren, in turn, shared that for Samsung, DE&I was an important focus area: “We are not just to do the right thing, we are doing it because it is good business.” He also cited findings of studies that VC firms which increase their proportion of women partner hires by 10% saw, on average, a 1.5% spike in overall fund returns each year and had 9.7% more profitable exits.
Klemens spoke of the benefits of working in a “speak up” culture, from the standpoint of the LGBT community.
Warren also expressed his firm conviction of the positioning of CVCs to contribute to a positive change: “Corporates are well-positioned to be real leaders in this drive. At Samsung, we have an investment thesis looking at some underserved consumer segments, so we have a business imperative to do that. So, I think it is a great opportunity.”
The panellists also discussed a list of recommendations they made to corporate ventures in a push to increase DE&I. The recommendations included, among other things:
- defining what “diverse” meant for the organisation;
- setting reasonable and measurable future goals;
- publishing baseline metrics and goals;
- encouraging active event participation targeting diverse founders and CEOs;
- allocating marketing budget to diverse sponsorships and events;
- setting quantifiable relationships management goals for diverse founders and CEOs;
- considering LP investments in funds focused on underrepresented founders and CEOs.
Williams spoke on LP investments and said she considered them an “opportunity to seek advice [on diversity] and to invest, of course”. Warren mentioned an optional survey his organisation used to measure diversity within teams and portfolio companies. He encouraged other CVCs to do the same and hoped to be able to share results during the next GCVI Summit.
Lam Research is chipping away at CVC
Kaloyan Andonov, reporter
Julia Samoylenko of software provider Proseeder interviewed Faran Nouri, managing director of Lam Capital, the investment vehicle of semiconductor processing equipment company Lam Research. Nouri explained to the audience how the venturing unit was structured: “We invest from the balance sheet but we are a separate limited liability company and run like an evergreen fund.”
She also shared Lam Capital’s approach to finding potential investment: “In the beginning, we wanted to get access to dealflow, so we were looking for best practices and to build relationships. Today, six years later, we get more dealflow than we can cope with but the first couple years it was not easy.”
Nouri also shed light on the stage-orientation of the venturing arm: “We are an early stage investor. We think, as a CVC, we can add most value at this stage. Our sweet spot is series A and B deals. We do follow-on investments afterwards.”
She told the audience about some of the challenges of establishing Lam Capital within her organisation: “When we started out, a lot of people saw it as a waste of money. It really needed support from the CEO and a lot of establishing relationships, educating and communicating internally.”
She encouraged nascent CVCs to seek advice on structure and best practices from established VC funds: “There is a lot of data, information and best known practices now but when I started there was none, so I had to talk to GV and Intel Capital and people were very generous in sharing a lot about their practices.”
Nouri also summarised the overall dynamics of the industry of the corporate parent of her fund: “The semiconductor industry is in the middle of the data and AI disruption. You need a new class of storage memory chips developed. You have big tech entrants coming into the market and when they do not find a chip that works for them, they are willing to partner startups or try to make it themselves.”
Above: front row (L-R) Sue Siegel, James Mawson, Claudia Fan Munce, Young Sohn, Janice Mawson (no
relation)