By Reese Schroeder
Managing Director, Motorola Solutions Venture Capital
Chair of NVCA Corporate Venture Group Communications Committee
As I headed back to Chicago from the Global Corporate Venturing & Innovation Summit in Sonoma a few weeks ago, several things were running through my mind. There were great speakers interesting topics, and, of course, great networking. There was also a lot of focus on how many new CVC programs were being started in the last few years. However, the one thing that really struck me was how many CVC programs have sustained for many years. Intel Capital, Qualcomm, IBM, Citi and my own company, Motorola Solutions to name a few. While all of these companies come from different areas, I am struck by the common themes across all of them that allowed them to continue for so many years.
Building a sustainable venture group means partnering with entrepreneurs and financial venture capital investors to build companies that change the world. In his remarks at the GCVI Summit, Jon Callaghan, founder of True Ventures and NVCA Board Chair said, “We are the place in the U.S. economy where incredible risk can be taken. Entrepreneurs have the ability to capture our imagine and change the way that we live. It’s an enormous impact that corporate venture investors and financial VCs can create together.”
As the latest NVCA/PwC MoneyTree™ Report shows, corporate venture investing continues to increase. The data show the growth of the synergistic relationship between CVC and VC. In 2015, the venture ecosystem deployed over $58 billion and 21 percent of all deals had a corporate venture investor – the highest level of participation by CVCs since 2008. With the rise of corporate venturing, it is important to assess what makes a corporate venture group successful.
First, commitment from senior management is a must. The CVC unit must have the strong support from the C-suite of the corporation. All of these programs report into the senior leadership of the company. Investment boards are populated by very senior people.
Second, you must have an experienced team. While it is good to bring outside perspectives into the team, the core leadership must be people that have a history and experience with the company – and are trusted by the business people with whom they work. All of the companies I mentioned above share this characteristic.
Third, you must prove yourself as a valuable member of the CVC and VC communities. All of these companies have syndicated with many members of the ecosystem. All have proven that they know what is the right behavior as an investor. All participate in the most important industry conferences. All of these organizations are actively involved in important industry groups like NVCA. Through all of these things, they have developed the critically important “Two Rs” – reputation and relationships.
Fourth, you have to stay the course. All of these firms have continued to remain active even in the face of changing economic conditions. CVC is not an activity that can be started and stopped as the economic climate changes. All of these firms have continued to remain active through the ups and downs of the overall market. I am convinced that is a key to long-term success.
Finally, all of these organizations have demonstrated a track record of success, both strategic and financial. All of them have case studies to demonstrate what they have accomplished. By doing right by the companies they invest in, they do right by their co-investors and the community as a whole. This is demonstrated by the string of IPOs and successful M&A deals that each of these organizations have been involved in.
It is great to see so many new corporate venture groups being formed. I just hope that they will reach out and talk to at least some of these long-standing groups. I think there is a thing or two they can learn from them.