As part of our full annual review we asked corporate venturing industry leaders “what are the big opportunities to look out for in 2018?” The report – World of Corporate Venturing 2018 – will be published at the Global Corporate Venturing & Innovation Summit in Monterey, California, on January 31. The full survey includes insights on best practices in corporate venture capital.
Sue Siegel, chief innovation officer, GE
Megafunds through microfunds – blurring and mixing of strategic and financial funds. For example, SoftBank Vision Fund is highly strategic for SoftBank and its assets.
SoftBank is rewriting the rules of investing. Call it disruptive investing – venture, private equity, hedge – all in one fund. It has to deploy $5bn every quarter to stay on its proposed investment track. It is raising a $200bn fund right now, which would require a quarterly commitment larger than a considerable segment of the venture industry.
We are also seeing a pendulum swing back to independent venture from corporate venture capital, given the huge amounts of money pouring into groups like KKR, SoftBank and others. This may make it harder for CVC to compete though clearly CVC is here to stay. We will need to be even more assertive about how we add value.
Venture capital is becoming more of a reality for women.
Returns from the top quartile in private equity are greater than the top quartile in venture, again, due to unprecedented levels of realisation opportunities for private equity firms. As a result, larger private equity firms are reaching further down the risk spectrum for opportunity.
Bubbles may be a problem. The world is awash in cash, with pension and sovereign wealth funds taking on much greater operating roles in portfolio companies No company is off limits, such as the Chinese proposing to invest $100bn in Aramco. Chinese investors, particularly sovereign investors, want to pursue artificial intelligence (AI) and machine learning in the same swarm fashion as they did solar.
Every major and minor industry is addressing transformation, mostly still from a defensive position – for example, cost out versus yield-enhancing perspective.
Data is now readily accessible and knowledge is far more valuable.
Other trends include blockchain moving to the supply chain, and, in a continuation of 2017, overvalued companies will have to right-size, signalling a return to investment basics.
SaeMin Ahn, managing partner, Rakuten Ventures
We have another generation of richly-funded and valued AI companies readying to create value. Are we in for another flattening and acquihiring market?
How much of the barrel can you scrape until there is a critical lack of human resources for engineering and overall computer science? Where does capital go to for safe harbour?
How does increasing scrutiny on General Data Protection Regulation affect business models once thought to be durable?
Where do the 30 other unacquired non-backed autonomous driving startups place themselves in market driving – forgive the pun – towards vertical integration.
Mirroring the bike-sharing model of China without context of backers and intention will lead to a rude awakening.
Biplab Adhya and Venu Pemmaraju, co-heads, Wipro Ventures
Serverless computing, industrial cybersecurity, augmented reality applications in enterprise use cases, AI and machine learning-driven diagnostics.
Riyadh AlRuwais, partner, STC Ventures
Cryptocurrency – initial coin offerings versus venture capital
Mariano Amartino, Latin American startups director, Microsoft
In Latin America – fintech and edtech.
Ron Arnold, managing general partner, IAG Firemark Ventures
Valuations and particularly early-stage valuations. Some of these just looked to be way overcooked. At some point, this will come back to earth and this has the potential to harm the industry.
Tony Askew, founder partner, REV Venture Partners, and co-chairman, GCV Symposium 2018
The single biggest factor propelling the investment landscape is the volume of capital now being deployed – $240bn in the past three years, of which more than a third came from non-traditional VC sources – sovereign wealth, mutual and pension funds and an expansion of corporate investment activity. This has led to expanded valuation expectations, particularly at early rounds from more intensive competition for deals.
Amit Aysola, managing director, Wanxiang Healthcare Investments
Blockchain in healthcare.
John Banta, managing director, Blue Cross Blue Shield Venture Partners
The continued quest for value-based – or at least more effective and efficient – clinical approaches.
Miroslav Boublik, group head of special projects, Home Credit Venture Capital
Alternative payment mechanisms.
Louis-Philippe Boucher, venture analyst, Randstad Innovation Fund
Data collection, storage and analytics.
Scott Brun, vice-president of scientific affairs, and head of AbbVie Ventures
Areas of portfolio focus by technical area or platform will become important. As new funds begin investing, how many more bets on immuno-oncology will VCs be willing to make? Will VCs be willing to invest in immunoscience and neurodegenerative disease even though translational uncertainty exists in these areas?
Laurel Buckner, senior vice-president and managing director, ATN Ventures
We will continue to see investment in AI grow, but now it will be in even more bespoke solutions for verticals. There will be more investment in this area. The tough decision for investors will be what exactly is the value of AI in this instance and how is this AI company or technology doing something different from others. The trick is, as always, separating the wheat from the chaff.
Roel Bulthuis, managing director, Merck Ventures
Still cancer immunotherapy, but away from cell therapy.
Tony Cannestra, head of Denso Corporate Ventures
Advanced robotics, mobility, manufacturing, internet of things.
Leo Castellanos, investment director, Saatchinvest
Brexit [Britain leaving the EU].
Oscar Chamberlain, general manager, Petrobras/Cenpes
The internet of things and the software industry.
Tony Chao, head of Applied Ventures
Artificial intelligence and deep learning.
Piyush Chaplot, partner, Innosight Ventures
The bitcoin and initial coin offerings bubble might burst.
Scarlett Chen, director of strategic investments, Prudential
Will fintech investments eventually cool down?
Eddi Danusaputro, CEO, Mandiri Capital Indonesia
Unbanked and underbanked market.
Jay Eum, co-founder and managing director, TransLink Capital
Continuation of blockchain technology, cryptocurrencies, and initial coin offerings as an alternative to traditional fundraising.
Aurora Fagerhus, executive assistant, Marsec
Internet of things, transportation technology and shipping.
Ernest Fung, senior director, head of international corporate development, JD
The Committee on Foreign Investment in the US, an interagency committee of the US government that reviews the national security implications of foreign investments in US companies or operations, and cross-border acquisition approvals. Initial coin offerings and cryptocurrency impact on capital raising and strategic investments. Rising private market valuations in emerging markets.
William Germain, director of mergers and acquisitions and strategic development, Inmarsat, and venture capital adviser, Techstars
Internet of things, artificial Intelligence and digital service platforms.
David Gilmour, head of BP Ventures
Connected cars, battery management.
George Hoyem, managing partner, In-Q-Tel
Scarcity of human resources – it will become harder and more expensive to hire and pay for human resources in tech focused markets. This will drive startups to second-tier markets.
Rising cost of building a startup – bases on full employment and real estate costs, the cost to build startups will continue to rise precipitously.
When will the music stop? VCs will continue to worry about valuations and the simple fact that we are at the top of the business cycle, which could continue for a few years or just as easily correct.
Bevin Jacob, partner and co-founder, Automobility
Real-time sensing and sensor fusion.
Benjamin Joffe, partner, Hax
AI and machine learning are definitely here to stay. Healthtech is likely to see more products come to market, but in niche categories and medical applications. We are also excited about robotics.
Alexander Kalinnikov, investment manager, VTB Capital Investment Management
Machine learning for medicine, pharma and biotechnology.
Brendon Kim, managing director, Samsung Next Ventures
Artificial intelligence and edge computing.
Imran Kizilbash, vice-president and head of Schlumberger Venture Fund
Automation, analytics and machine learning has been a trend for the past few years. However, the application of these technologies in the energy space is still embryonic and a great deal of potential is currently untapped.
Shashi Kumar, director, SK Telecom
Artificial intelligence, machine learning and deep learning.
Nityen Ranjan Lal, managing director, Icos Capital Management
Hype is coming back it seems, thus higher valuations, more bad propositions (initial coin offerings?) getting funded.
Jacqueline LeSage Krause, managing director, Munich Re/HSB Ventures, and co-chairman, GCV Symposium 2018
AI applications, new materials, bio and robotics intersecting.
Fernand Lendoye, managing director, Aviva Ventures
Autonomous vehicle, smart mobility, blockchain, healthtech, insurtech.
Victoria Lietha, ABB Technology Ventures
Augmented reality, virtual reality, drones and autonomous cars.
Wayne MacGregor, strategic business development, Naspers
Online-to-offline.
Ashish Mahashabde, principal, IBM Ventures
Agriculture tech, augmented reality, cybersecurity, deep learning.
Brad McManus, managing director, Motorola Solutions Venture Capital
The biggest investment issues for 2018 will be legacy issues in CVC – how to optimise inorganic innovation into proprietary platforms and then how to monetise for business outcomes. We have monetised our capital investment well, but producing strategic outcomes that can be measured in terms of incremental revenues and profits remains a challenge that we will be working to solve in the coming year.
Dominique Mégret, head of Swisscom Ventures
How will the blockchain-related applications develop if and when the cryptocurrencies crash?
How fast will voice and gesture-based recognition become the interface of choice to command mobile and TV screens?
Tom Montgomery, senior vice-president, De Beers Ventures
Blockchain, AI.
Keith Muhart, senior director, Qualcomm Ventures
Consumer and industrial internate of things are gaining some good momentum and this should translate into some great investment opportunities in 2018.
Koji Murota, head of KU-iCap
Artificial intelligence, the next generation’s battery, antigen-specific T-cells.
Girish Nadkarni, president, Total Energy Ventures
Smart grid and machine learning.
Jay Onda, startup investments, Orange Silicon Valley
Artificial intelligence, initial coin offerings, services for underserved markets.
Tony Palcheck, managing director, Zebra Ventures
AI, automation, analytics and blockchain.
Amish Parashar, partner and director of strategic business development, Yamaha Motor Ventures
Specific, narrow applications of automation and autonomous systems.
Charles Paul, vice-president, Henkel Ventures
Sensors, energy capture and storage.
Ulrich Quay, managing partner, BMW i Ventures
Artificial intelligence.
Susana Quintana-Plaza, partner, Siemens Next47
Autonomous driving.
Mayuresh Raut, managing partner, Salamander Excubator Angel Fund
AI, blockchain, cryptocurrency hedge funds.
Erik Ross, head of Nationwide Ventures, Nationwide Insurance
Cybersecurity, autonomous tech, machine learning and artificial intelligence.
Marek Rubasinski, former director of startup investments and partnerships, Sky Ventures
In Europe, getting in early on new businesses leveraging PSD2 (Europe’s Second Payment Services Directive) personal banking regulation changes.
Gaurav Sachdeva, JSW Ventures
Robotics, big data, cleantech.
Seiji “Eric” Sato, unit general manager, Sumitomo Corporation Europe
The electrification of the automotive industry.
Reese Schroeder, managing director, Tyson Ventures
Agri and foodtech, artificial Intelligence, autonomous vehicles, factory automation, internet of things.
Jean-Pierre Sedaghat, managing partner, Vantage Capital Partners
Artificial intelligence.
Clara Shen, catalyst director, Mars
Non-tech CVC, China, multinational corporations in China.
Sam Tanskul, managing director, Krungsri Finnovate
Artificial intelligence.
William Taranto, president, Merck Global Health Innovation Fund
In digital healthcare, it remains to be seen if the IPO and M&A market will open up. My guess is more M&A than IPO. We have seen some inflated values for healthcare IT companies which I think will fail and come down rapidly.
Philipp Thurn und Taxis, managing director, Constantia New Business
Dry powder if the public markets come down, consolidation in a number of areas.
Frank Tong, global head of innovation and strategic investments, HSBC
Emerging markets in Asia and China have proved to be avid adopters of new financial technologies thanks to young and increasingly affluent digital natives with more sophisticated requirements from their financial services providers. This is turning China, Southeast Asia and India into leaders in the fintech space.
Continuing to meet these growing needs involves spotting global technology trends – artificial intelligence, blockchain, distributed ledger technology, biometrics and digital identity – and identifying the innovations that will most benefit customers. We will also continue to explore the potential of blockchain and distributed ledger technology to make trade easier.
Nobuyuki Toyoda, manager, office of the president, JSR
Artificial intelligence.
Jonathan Tudor, technology and strategy director, Centrica Innovations at Centrica
Valuation hypes, CEOs who choose to have only VC or only corporate investors. Another variation of the financial versus strategic question.
Masatoshi Ueno, senior manager, AGC Asahi Glass
Open and crowd collaboration for innovation.
Thomas Van Halewyck, founding partner, Bundl
Location-based entertainment.
Rita Waite, manager, Juniper Networks Ventures
Artificial intelligence, machine learning and blockchain.
Paul Wallace, managing director, Heritage Group
Healthcare technology.
Robert Wetzel, vice-president of corporate development, Enterprise Holdings
How to respond to the continued acceleration of advances in autonomous technology, AI, machine learning, and augmented and virtual reality, and the implementation into products. Accelerated M&A. More and broader CVC investments. Legislative responses to autonomous technology and AI.
Thomas Whiteaker, partner, Propel Venture Partners
Regulation of initial coin offerings. These will continue to be closely scrutinised by the regulators. Unfortunately, there will be bad players that screw it up and force regulators to get more involved. Lack of IPOs and exits – companies are staying private and not going public. Over time, this negatively impacts the venture industry. DPI (distributed to paid in, or the ratio of money distributed to limited partners by the fund, relative to contributions) matters.
Robin Wye, research commercialisation manager, BP
AI will have the hype for a while, but not all things branded AI are AI – even if they are, they are not useful. Old tech – tech for the aged. Plus a developing market in aid tech – investment in stuff for developing countries, but still with an eye to profit, not charity-driven.
Shintaro Yamakami, CEO, Colopl Next
Affluent money in the market equals increasing investment size and valuation.
Jimmy Zhu, vice-president, Citi Ventures
Operationalising the promises made from AI and machine learning.