In a shrinking venture industry, those venture funds able to do many deals with corporates are important financial partners helping corporate venturing teams achieve success.
There is a small pool of potential partners for deals. Globally, there have been only 30 venture firms in 10 or more investment syndicates with corporates that raised funds in 2012 so far, according to Global Corporate Venturing analysis (see table).
Available funds in the wider venture industry are even smaller, with only 170 US venture capital firms (VCs) making two or more investments in 2011, according to Silicon Valley Bank data.
Jack Young, director of the Qualcomm Life Fund, said: “Given the concentration of money with a small number of players, we end up pairing with mostly top-tier venture frms by default. However, there used to be many smaller funds which typically liked to syndicate with corporate investors to fll up a round.
“Today that is changing a little bit with the mega funds. There is not enough to go around any more. If you have a $900m fund and a $10m investment opportunity, you want to keep that to yourself as much as you can. As a strategic investor, we must work hard to demonstrate our real value-adds to get in a round.”
Those firms profiled here not only have the resources to do deals with corporates but can demonstrate investment success, providing a quality seal of approval for a transaction. Young said: “If Sequoia says ‘we are doing this round’ you take it seriously, as somebody in Sequoia is willing to do it.”
Speaking of two deals he put together with Sequoia, he said: “We are continuously seeking relationships with top-tier players. You can see that, in Airstrip, we followed Sequoia, while in Telcare, Sequoia followed us.”
The most active frm with corporates this year was Kleiner Perkins Caufeld & Byers. See profile.
Second most active corporate partner was New Enterprise Associates (NEA). Big deals involving NEA included an undisclosed $210m raised by Intarcia (see The Big Deal analysis), backed by corporates including Quintiles as well as the $125m E round raised by US-based cloud storage start-up Box.
This was also backed by US-based enterprise software business Salesforce and Intel Capital as well as SAP Ventures, the corporate venturing units of the eponymous US-based semiconductor company and the Germany-based software business respectively.
The largest exit by NEA was the $380m sale of Gaikai, where it invested alongside Intel Capital and Qualcomm Ventures.
Khosla was the third most active venture firm with corporates. The biggest single investment in one of its portfolio companies backed by corporates was Wanxiang backing GreatPoint Energy in a $420m round.
The next biggest investment in a Khosla portfolio company involving corporates was the $200m D round raised by mobile payments company Square, which is backed by Starbucks, Citi Ventures and Visa.
Khosla’s biggest exit involving a corporate was the sale for $1.2bn of offce social network company Yammer to Microsoft. AOL-backed CrunchFund was also an investor.
Draper Fisher Jurvetson (DFJ) was the fourth most active venture frm with corporates, including its various affliated funds. DFJ’s biggest investments included the aforementioned GreatPoint and Box, and its biggest exit was Yammer.
The ffth most active with corporates was Greylock. Its biggest investment alongside corporates was the $50m round raised by technology business management company Apptio, which had previously been backed by hardware company Cisco.
Greylock’s biggest exit alongside corporates was the $240m sale of Aeroscout to Stanley Healthcare Solutions, where it had invested alongside Cisco and Intel.
Sequoia was the sixth most active, and it also invested in Square. Its largest exit was the $1.2bn sale of Meraki, which was backed by search engine company Google.
Andreessen Horowitz was the seventh most active with corporates. Its largest investment alongside corporates was Box, while it also is an investor in social network Pinterest which raised $100m, a round led by Japan-based online marketplace Rakuten.
Andreessen Horowitz was involved in two exits worth more than $1bn at the time of sale, Nicira and Instagram, but no corporates were reported to have joined either of those syndicates.Index was the eighth most active venture frm with corporates.
Its largest investment alongside corporates was the $60m raised by customer service provider Zendesk, which was also backed by US bank Goldman Sachs and Silicon Valley Bank.
First Round was ninth most active alongside corporates, with its biggest investment round with corporates being the $27m raised by Say Media with UK-based communications company WPP.
Accel was the tenth most active with corporates. Its biggest exit was the $18.4bn initial public offering of social network Facebook, which was backed by software company Microsoft. Other corporate backers of Facebook included Russia-based internet services provider Mail.ru.
Accel’s biggest investment was the $150m round for FlipKart Online Services, an India-based retailer, which was backed by a consortium including Myriad International Holdings (MIH), the corporate venturing unit of South Africa-based media group Naspers.
Accel also invested in the $128m round raised by Legendary Entertainment, which was also backed by IDG Capital Partners, a corporate venturing unit of International Data Group, Morgan Stanley Investment Management, part of the US-based bank, and Google executive chairman Eric Schmidt’s investment frm Tomorrow Ventures.