Thank you to our partners, Paul Gompers at Harvard University and the National Bureau of Economic Research, Will Gornall at University of British Columbia, Steven Kaplan at University of Chicago Booth School of Business and the National Bureau of Economic Research, and lya Strebulaev at Stanford University Graduate School of Business and the National Bureau of Economic Research, for helping Global Corporate Venturing with our annual corporate venturing survey of industry leaders.
This month we ask these leaders: “What were the most important trends in 2016?” Next month we examine their insights into the big opportunities of 2017.
Both these questions will also be part of our full annual review – World of Corporate Venturing 2017 – to be published at the Global Corporate Venturing and Innovation Summit on January 25 in Sonoma, California. The full survey, conducted by the academics and GCV, includes insights on best practices in corporate venture capital. This survey is a follow-up to the largest survey yet of institutional venture capital by the four academics.
What were the most important trends in 2016?
Mark Sherman, managing director at Telstra Ventures:
The largest VC investors in the world are Alibaba, Tencent and Baidu. China has entered the global VC market in a significant way. China is likely to become the second most important VC market after California’s San Francisco Bay area within five to 10 years. With SoftBank’s Saudi announcement, Asia will only increase in importance in global VC. Sector-wise, next-generation communications (Twilio, Line), cloud apps (Coupa, Apptio), next-gen infrastructure (Nutanix) and security.
Christophe Chazot, group head of innovation at UK-based bank HSBC:
First, the increasing use of deep learning techniques in all segments. Second, the exponential threats on security leading to fraud and privacy issues.
George Kellerman, chief operations officer and general partner at Yamaha Motor Ventures & Laboratory Silicon Valley:
The rise of data analytics and robotics in agriculture.
Fernand Lendoye, managing director at Aviva Ventures:
Digitisation, peer-to-peer, big data.
Eric Landais, chief growth officer at Degremont:
Renewables and digital.
Marc Oerke, head of digital corporate venturing at Allianz Group:
Insurance companies are finding their way into the startup ecosystem.
Shin Takano, director at Murata Ventures:
Virtual reality technologies in practical use. Revival of artificial intelligence as a cloud-based platform.
Steven Berger, managing director, new business development at Asahi Kasei America:
Healthcare monitors and associated IT. Water reuse.
Shankar Chandran, managing director and head of Samsung Catalyst Fund:
In 2016 we saw and invested in several opportunities where data-centric approaches to building smart devices – internet of things, robotics, smart cars – created new business models and use cases for consumers and enterprises.
Savitha Srinivasan, vice-president of ecosystem strategy and development at IBM Commerce:
The democratisation of artificial intelligence (AI) with a fairly broad adoption of machine learning technologies in every industry and consumer application. Take chatbots as an example, now more than 51 corporations have AI-powered chatbots deployed to streamline business processes and customer service.
Thierry Piret, Solvay Ventures:
Growing CVC involvement.
Phil Graves, managing director at Tin Shed Ventures:
Investors are beginning to evaluate the social and environmental facets of the companies they invest in.
Yoshiaki Tanaka, director of business development at SoftBank US:
Business-to-consumer, business-to-business and internet-of-things (IoT) business use cases. IoT connectivity – low power wide area – IoT security, IoT analytics.
Bruce Haymes, managing director at Nielsen Ventures:
The divergence of corporate venture capital from institutional venture capital. In 2016 we saw traditional venture capital raising larger funds and putting those funds to work in late-stage startups – those with more than $1bn valuations in many cases. In essence, traditional VCs took a flight to safety. During the same time, corporate VCs became more active with early-stage programmes, even going as far back in lifecycle to seed state investing and incubators. My sense is that corporate VCs had tremendous leverage and attention from early-stage startups that in previous years would have been dominated by institutional venture capital.
Yash Patel, investor at Telstra Ventures:
From a sector perspective, the emergence of artificial intelligence will disrupt a lot of industries. From a CVC perspective, the growth and validation of corporate venture dollars – for example, Baidu and SoftBank – is interesting. Deploying these dollars carefully by staffing up appropriately will be key.
Markus Goebel, managing director at Novartis Venture Fund:
Market performance of biotech, pharma and IPOs, Crispr.
Pankaj Makkar, managing director at Bertelsmann India Investments:
Too much money chasing not-too-great companies.
Skyler Fernandes, managing director of Simon Venture Group:
More investments in later-stage seed rounds and series A, especially with direct-to-consumer brands. The competition is increasing, as there are more seed and series A opportunities with more traction than before. Great startups are proving they can do more with less.
Christopher Langford, director of Lowe’s Ventures:
Companies are starting to access the IPO window again instead of taking huge rounds of late-stage capital to remain private.
Brian Pietras, head of technology ventures at Hays:
Small and medium-sized enterprise software-as-a-service (SaaS), marketplace-enabled SaaS, fintech and insurtech.
Dion Lisle, vice-president, head of fintech at Capgemini:
Application programming interfaces coming into full production across the financial services spectrum probably made the most difference even though blockchain hogged all the headlines.
Renato Valente, Brazil manager for Telefónica Open Future:
A lot of corporate interest in understanding how to invest.
John Hamer, head of Monsanto Growth Ventures:
Agtech was big. Drones, robotics, machine learning.
Arindam Guha, corporate development executive for M&A and Venture Investments at IBM:
Artificial intelligence technology.
Masatoshi Ueno, senior manager at Asahi Glass:
Autonomous vehicles.
Minette Navarrete, president at Kickstart Ventures”
Banks tiptoeing into fintech. Southeast Asia becoming viable for an Asia play versus the conventional focus on China and India.
Peter Faaborg-Andersen, global marketing and business development director at Novozymes:
Big corporates are starting to see venture capital as an important part of their strategic investment tool box!
Kevin Riches, director at Carteme:
Brexit, Trump, unstable political environment.
Roman Samsonov, director of investments at Sberbank Venture Capital:
Data science.
Jonathan Costello, entrepreneur-in-residence (EIR) leader for Europe at Cisco:
Deep learning.
Michael Bowring, senior investment manager at Sabic Ventures:
Energy storage and recycling plastics.
DavidVay, legal counsel at Orange Digital Ventures:
Fintech, internet of things.
Kampanat Vimolnoht, venture investment manager at Ascend Capital:
Fintech, payments and e-commerce, social commerce (early 2016).
Riyadh AlRuwais, partner at STC Ventures Fund:
Saudi Arabia investment in Uber, launching the largest regional e-commerce in the Middle East and North Africa region by a Saudi public investment fund.
Frank Andrasco, VC at Siemens Venture Capital:
Lots of new corporate investors dipping their toe into the market.
Hiroshi “Hiro” Saijou, CEO and managing director at Yamaha Motor Ventures & Laboratory Silicon Valley:
Precision agriculture, autonomous cars.
Seiji Sato, general manager of business development unit at Sumitomo Corporation Europe:
Sharing economy.
Joel Albarella, senior vice-president and head of New York Life Ventures:
The humanisation of hardware and software.
Ankur Kamalia, head of venture portfolio management at Deutsche Börse:
The material increase in corporate venture capital’s contribution as a percentage of VC spend, demonstrating an increasing desire and need for collaboration between established corporates and new entrants in the market.
Asish Xavier, vice-president of venture investments at J&J Innovation–JJDC:
Decrease in the number of unicorns being generated, and lack of the long-awaited tech IPO boom.
Peter Donat, head of new ventures at First Data:
Down rounds and investor rationality in irrational valuations with bad business models.
Cynthia Mandjek, investment analyst at Orange:
Fintech, mobile banking.
Ajay Sharma, investment associate at JetBlue Technology Ventures:
The return of large-scale corporate venture investing.
Claudia Fan Munce, venture adviser at New Enterprise Associates and former managing director of IBM Venture Capital Group
The continued rise of corporate venture as a critical part of the corporation. Corporations need to respond to the changes in the marketplace not just by setting a CVC unit up – as we saw since 2012 in the growth of CVC numbers – but by the position of power and influence the leaders of corporate venture have within the structure of decision-making within large corporations. This would be evident by the recruitment of corporate venture talents as high-level vice-presidents and presidents, and with a direct reporting structure to CEO, chief financial officer and chief technology officer.
Abdul Guefor, investment director at Intel Capital
Big data and drones.
Ignaas Caryn, director of corporate strategy at Air France-KLM
Autonomous vehicles and fintech.
John Suh, executive director, Hyundai Ventures
The automotive industry and related sectors – for example, mobility-as-a-service.
Roel Bulthuis, senior vice-president and managing director at Merck Ventures
A round financing commitments straight to potential liquidity, reducing refinancing risks and the complexity of deals.
Anthony Palcheck, managing director at Zebra Technologies
As part of our annual corporate venturing survey of industry leaders, we examine the most important trends of 2016.
Xuan Chen, managing director at the ARM/HOPU fund
Artificial intelligence, internet of things, robotics.
Jon Lauckner, chief technical officer and vice-president of R&D at General Motors and president of GM Ventures
Very large investments and acquisitions ($100m to $1bn) by several auto manufacturers and automotive suppliers, including GM, Toyota, VW and Ford, in ride-sharing and autonomous vehicle technology startups. Several of these companies have not traditionally been venture capital investors, but are now taking a more active role due to the growth of transportation-as-a-service.
Peter Cowley, investment director at Martlet, the corporate angel division of UK-based engineering company Marshall. He is also a shareholder in Mawsonia, publisher of Global Corporate Venturing
In the UK, continuing valuation inflation, with no evidence yet from exits that this inflation is justified, driven partly by commoditisation of early-stage investment money.
