By Christina Karapataki
The National Venture Capital Association’s (NVCA) hosted the Corporate Venture Summit in Sunnyvale, CA on October 22nd, 2015 and attracted more than 150 corporate venture capital (CVC) professionals to learn and discuss CVC strategies. Titled “Charting the Road Ahead for CVCs”, the NVCA’s premiere annual gathering for CVCs focused on how corporate VCs collaborate with internal business units, financials VCs and startup CEOs. The event was hosted at the Plug and Play Tech Center, which has 280 portfolio companies and encourages strong CVC participation in its activities.
Key themes at the Corporate Venture Summit included the growth of corporate venture capital activities, innovations in venture investing deal terms and venture debt terms, and the interaction between corporate and financial venture capital groups.
The Keynote speaker, Steve Bowsher, Executive VP of Investments at In-Q-Tel, gave insights on how In-Q-Tel works with government agencies to establish and execute its investment strategy. There was discussion across most of the panels on the rise of unicorn companies (startups with billion dollar valuations) and how the venture environment feels frothy.
During a session named “CVC Key Trends”, the panelists discussed how corporate VCs are one of the fastest growing segments of the venture community and 60 percent of venture deals in 2015 had CVC participation. About 30 percent of NVCA members are corporate investors. According to Adley Bowden from Pitchbook, early stage deals with CVC participation are valued at about a 10 percent premium to similar stage deals without CVC participation.
Below are some of the key takeaways from the Summit:
- CVCs are a growing segment of the venture ecosystem with the focal point being in the United States but activity also expanding globally with China emerging as an area of strong CVC activity.
- Corporate venture arms need to have good communication with internal business units to establish technology priorities and align investment strategy. CVCs can serve as effective facilitators for entrepreneurs to effectively approach corporations about investment and business development activities.
- There have been more collaboration and deal sharing activities between financial and corporate VCs over the last two years.
- During the financial VC panel, all four panelists expressed the same opinion, that they expect CVC activity to increase over the next five years. They expect the imperative for external R&D and the need to keep up with the fast pace of innovation to increase thus driving more venture activities from corporations.
- CEOs from venture-backed companies that are backed from both corporate and financial investors stressed the importance of aligning interests with the CVC parent companies prior to securing any investment.
Christina Karapataki is a Venture Principal in the Early Stage Technology Investments group at Schlumberger Technology Corporation. She specializes in early stage investments in energy, advanced materials and sustainability technologies. Her current focus is on finding early stage technologies, across multiple sectors and industries, which can be adapted to serve oilfield applications.