Happy Birthday Global Corporate Venturing! Last week Jim, Tim and the team celebrated with their 2nd year in business with their 2nd annual symposium. The event has expanded from a ½ day session in 2011 to a 2 day program which was sold out both days. The quality of the speakers and the audience was really excellent – Congratulations!
This is good lead into a short post about corporate VC vs. traditional VC. There is currently a lot of interest in corporate venturing. GCV are fulfilling an important role collecting and sharing data regarding the approach and performance of corporate venturing. Many big companies are discovering that open innovation can be an effective tool for understanding disruptive technologies and business models. Earlier in the week I wrote about some of the changes happening in the VC world. It is worth exploring how these play out for corporate VCs.
First of all corporate VC is relatively immature compared with traditional venture capital. There are few firms who have been active for more than a decade. Most came to the party in 2000 only to get into the market just before the crash. John Moulton highlighted Accenture’s dramatic entry and exit from the market in a very entertaining presentation. There are exceptions of course but by and large corporates are newcomers to the industry. In general this is a good thing. There are less legacy issues to be managed as it has allowed many corporates to watch and learn without committing significant financial and political capital.
Second point of interest is scale. GCV reports that corporates account for 27% of all venture backed exits. Stephen Ziff reported that CVC account for $22b which would put it on a par with traditional VC in US. That is very interesting. It would appear that this number will increase are corporates get more involved and traditional VC downsizes. As corporates learn how to work effectively with start-ups and demonstrate additional value in terms of market reach, credibility, etc – they will attract more start-ups and generate more capital.
Along with scale, the variety and complexity of CVC is very interesting. Fund of funds, minority stakes, majority stakes, spin outs, open innovation, the list goes on. More importantly many of the people I met have started to figure out what is the balance between hard financial returns and softer strategic benefits. Like the old adage, 50% of our marketing spend is wasted we just don’t know which half. Same with corporate venturing, however it appears that execs are getting more comfortable with a level of ambiguity that is associated with this activity. Or at least understanding how quickly the world is changing and how to important it is to understand disruptive change.
We were delighted to be awarded personality of the year award for our work with IBM Global Entrepreneur. It was an honor to collect this on behalf of the corporation and the whole team. The program has grown over the last 2 years from an internal start-up to a global program with hundreds of mentors helping thousands of entrepreneurs. This take a committed global team to make a reality. We are very happy that GCV has recognised this work.
Looking forward to next year already.