business opportunity through corporate venture capital
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BUSINESS OPPORTUNITY THROUGH CORPORATE VENTURE CAPITAL
FASTERFUTUREFINTECHFORUM
“Theysuck!Theyarenotinterestedinthecompany’ssuccessortheentrepreneur’ssuccess.Corporationsexisttomaximizetheirinterests.Theycanneverbemenchy ormagnanimous.It’snotintheirDNA,andsotheysuckasinvestors.”
- FredWilsonofUnionSquareVentures,oncorporateventurecapital
CVC: VC’S MISUNDERSTOOD, LESS SEXY COUSIN?
GLOBAL VC INVESTMENT ACTIVITYGLOBAL VC INVESTMENT ACTIVITY ON THE RISE WITH 2015 BEING A RECORD YEAR
$45
$64 $59 $65
$108
$141 $127
8,459
10,842
13,006
15,800
18,157 17,992
…
2010 2011 2012 2013 2014 2015 2016
GLOBAL VC FINANCING
Invested ($Bn) Deal count (#)
Source: KPMG
13,655
$5.3M $5.9M $4.5M $4.1M $5.9M $7.8M $9.3M AVR. $/ROUND
57%
12%
31%
GLOBAL VC INVESTMENT ACTIVITY GLOBAL VC ACTIVITY HAS NEARLY DOUBLED FROM 2013 TO 2016
$127.4BN INVESTED
13,665DEALS
2016
AMERICAS§ $72BN INVESTED
§ 8642 DEALS
EUROPE§ $16BN INVESTED
§ 3142 DEALS
ASIA§ $39BN INVESTED
§ 1742 DEALS
Source: KPMG
CORPORATE VENTURING BY THE NUMBERSCORPORATE INVESTMENT ACTIVITY HAS RISEN SHARPLY OVER THE PAST 5 YEARS
Source: Forbes, KPMG, CB Insights
NUMBER OF GLOBAL ACTIVE CORPORATE INVESTORS IN 2016
965 3x 75%INCREASE IN GLOBAL ACTIVE CORPORATE
INVESTORS
PERCENTAGE OF FORTUNE 100 ENGAGED IN
CORPORATE INVESTING
NUMBER OF PATENTS PER DOLLAR INVESTED
VS. IN-HOUSE R&D
3x 32%PERCENTAGE OF CVC
FUNDING TO ALL STARTUP FUNDRAISINGS
CORPORATE VENTURE INVESTMENT VOLUME
Source: CB Insights
CORPORATES PLAYING AN INCREASINGLY PROMINENT ROLE IN VENTURE FUNDING
9.7 16.9 29.112.7
31.954.1
71.3
26.4
23% 24%29%
32%
2013 2014 2015 1H2016
CVC FUNDING CONTRIBUTION ($BN)
Other Funding ($Bn)
CVC Funding ($Bn)
CVC Funding to Total Funding (%)
960 1260 1365 633
49025475 5753
2480
16%19% 19% 20%
2013 2014 2015 1H2016
CVC PARTICIPATED DEALS (#)
No CVC Deals (#)
CVC Partipated Deals (#)
CVC Deals to Total Deals (%)
WHO ARE THESE CORPORATE VENTURERS?A WIDE ARRAY OF INSTUTIONS SPANNING TECH, HEALTH CARE, FINANCE, AUTO, FMCG, ENERGY & MEDIA HAVE JOINED THE VC SPHERE TO FOSTER INNOVATION
THAI CVC AS A DRIVER OF INNOVATIONIN 2016 & 2017, THAILAND’S STARTUP ECOSYSTEM HAS SEEN AN INFLUX OF CVC ACTIVITY, WITH LOCAL BANKS LEADING THE WAY WITH OVER US$150 MILLION IN NEW INVESTMENT FUNDS
Wave2:FinancialWave1:Telcom Wave3:Industry
STRATEGIC REASONS FOR CVCTHERE ARE A VARIETY OF STRATEGIC REASONS FOR COMPANIES TO ENGAGE IN CORPORATE VENTURING, AND MANY WAYS TO MEASURE STRATEGIC RETURNS FROM SUCH ACTIVITY
SOURCENEWPRODUCTS&SERVICES
OUTSOURCER&D
NURTUREECOSYSTEM&STIMULATEINNOVATION
SOURCEACQUISITIONTARGETS
KNOWLEDGEACQUISITION&TRANSFER
RECRUIT,DEVELOP&MOTIVATETALENT
COMPARISON: FINANCIAL VS. CORPORATE VC
FUND OBJECTIVE
CONTROL PREFERENCE
VALUE CREATION
Financial return
FINANCIAL VC CORPORATE VC
Financial and/or Strategic return
Board seat (active role) Board observer role (passive role)
Financial return• Successful exit of portfolio
company (IPO, trade sale)Strategic return• Learning (Tech know-how) • Product implementation usage• Company acquisition
Financial return• Successful exit of portfolio
company (IPO, trade sale)
SOURCE OF FUNDS External (Limited partners) Internal (Company-sponsored)
FUND HORIZON Limited life (typically 10 years) Typically no end of fund life
FOLLOW ON Based on investment prospects Based on corp. objectives & appetite
CORPORATE VENTURING CHALLENGES
• DECISION MAKING PROCESS & SPEED
• TIME & COST OF IMPLEMENTATION• COMMITMENT & LONGEVITY
• ALIGNMENT B/W CORPORATE & STARTUP
• EXCLUSIVITY• COMMAND & CONTROL
• FINANCIAL VS. STRATEGIC RETURNS• VALUE ADD & EXTRACTION• TYPE & TIMING OF EXIT
• ALIGNMENT B/W CORPORATE & VCs
• COMPENSATION & CARRY• RECRUITMENT &
RETENTIONTALENT RETURNS
ORGANIZATIONCULTURE
FASTERFUTUREFINTECHFORUM
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