Earlier this summer, I had the pleasure of speaking at Global Corporate Venturing’s (GCV) Digital Forum on the future of Corporate Venture Capital. As GCV’s most recent annual report highlights, corporate venture is a fast growing industry, but it’s still a young sector in the broader world of investment.
While there are certainly long-standing CVC firms in the market, many have emerged within the last few years and have taken on the arduous task of building teams, processes and winning the confidence of both their parent corporations and entrepreneurs from square one. But today, as we continue to grapple with a global pandemic that has upended business across industries, the time has come for reflection to ensure we are supporting innovation in the new world in the best ways possible.
All CVCs should be taking the time to review the inner workings and strategies of their firms; Are investments strategic or financially motivated? What’s the sustainability or long-term commitment of the team? What kind of KPIs, carry or exits have been achieved thus far? How are you contributing to business development initiatives and creating lasting value for the “mothership”?
Overall, we believe that corporate venture has proven its value to corporations and the entrepreneur community in the last decade. Despite these uncertain times, we look forward to seeing how the industry will continue to evolve. Below I’d like to share some reflections and observations from Sony Innovation Fund (SIF) on the future of corporate venture capital.
Sony Innovation Fund – Investing Where the World is Moving
We were established in 2016 to help Sony get closer to the world’s creators and vice versa by broadly investing in innovative startups, new ideas and the technologies of tomorrow.
SIF started with $100m to invest in seed and early-stage startups across Japan, the US, Europe and Israel. These are companies adjacent to Sony’s business units or in new or emerging markets that would foster business creation. We believe we can benefit the startup community by acting as the gateway to Sony — offering technical and business expertise, IP co-creation, R&D and access to our global partner network to help companies scale, reach new markets and create global businesses.
Thus far we’ve made over 60 investments and have expanded into new countries and regions such as India and Canada while broadening our scope in Western Europe with investments in Sweden and Italy. Finally, in partnership with Daiwa Capital Holdings, we launched Innovation Growth Ventures (IGV) in 2019 as a new investment vehicle. The $150M Fund includes investment from outside limited partners (LPs) and represents a distinctive form of venture, where we can fully leverage the expertise, capabilities and highly renowned technological resources of Sony through SIF, as well as Daiwa’s wealth of investment and asset management expertise.
IGV, which is also managed by the global SIF team, has enabled us to broaden our investments to middle and late stage startups. With the two Funds, our team continues to invest in the areas where the world, and Sony, are moving, including AI, robotics, mobility, IoT, entertainment, medical, fintech, sports and much more.
The COVID-19 Experience – Prioritizing People
The impact the pandemic has had on society and the global economy has sent waves throughout the corporate and startup community alike as organizations re-evaluate what’s important and what isn’t. Of course, the safety of people, from employees to families and customers and beyond, has been of the utmost importance.
Sony’s ongoing commitment to people and innovation is an attribute which runs throughout our DNA. As investors, it’s critical to support current and future portfolio companies from sharing market insights or technical, operational or financial guidance to help navigate the path forward.
By adapting to the current climate of remote work, business development and deal making, CVCs have ample opportunity to accelerate their own funds with new opportunities while also helping their startups come out stronger post-crisis.
The Future of Startups & Corporate Venture Capital
With COVID-19, we’ve seen the world forced into digital transition like never before, creating a greater need for innovative technologies to help build more resilient businesses.
Sectors we’re seeing succeed range from technologies ushering in the new era of work (e.g., 5g) to solutions that facilitate more complex online financial transactions, to personal identification technology. Of course, health tech is booming and database SaaS services will continue to flourish as businesses are now acutely aware of the power of data from customers to the supply chain.
In this environment, CVCs will need to watch capital markets more carefully and define investment areas more narrowly to ensure investments are providing real value to both corporations and society. While we believe there will be a greater focus on social good, diversity and sustainability as a whole, CVCs should take this opportunity to champion change within their organizations, the entrepreneurial community, and the industry to emerge as the path leaders post COVID-19.