Global Corporate Venturing's top stories in 2019
There was plenty of news and industry activity to cover and the most-read articles of the year at Global Corporate Venturing were (in descending order):
1. The most-read article of 2019 was the up-and-coming stars in the corporate venturing industry, presented at a gala dinner in the Monterey aquarium, California, at the end of January 2019.
After the introduction: Stars shine with their impact, the top 10 out of the full 100 were:
GCV Rising Stars Awards 2019: #1 Russell Dreisenstock The Top 25: #1 Russell Dreisenstock, Naspers Ventures
GCV Rising Stars Awards 2019: #2 Meghan Sharp The Top 25: #2 Meghan Sharp
GCV Rising Stars Awards 2019: #3 Haiyang Yu The Top 25: #3 Haiyang Yu, Tencent Investment
GCV Rising Stars Awards 2019: #4 Marian Nakada The Top 25: #4 Marian Nakada, Johnson & Johnson Innovation–JJDC
GCV Rising Stars Awards 2019: #5 Jeff Housenbold The Top 25: #5 Jeff Housenbold, SoftBank Investment Advisers
GCV Rising Stars Awards 2019: #6 Andy Fligel The Top 25: #6 Andy Fligel, Intel Capital
GCV Rising Stars Awards 2019: #7 Alex de Winter The Top 25: #7 Alex de Winter, GE Ventures
GCV Rising Stars Awards 2019: #8 Christopher Chu The Top 25: #8 Christopher Chu, Samsung Catalyst Fund
GCV Rising Stars Awards 2019: #9 Pramila Mullan The Top 25: #9 Pramila Mullan, Accenture Ventures
GCV Rising Stars Awards 2019: #10 Jill Ford The Top 25: #10 Jill Ford, Toyota AI Ventures
GCV Powerlist Awards 2019 Contents
2. The second-most-read article of 2019 was the stars’ bosses in the corporate venturing industry, presented at a gala reception at the House of Commons inside the UK parliament in May.
After the GCV Powerlist 2019 Introduction and CEO Quotes for the Powerlist Nominations came the top 10 out of 100:
#1: Jeffrey Li Tencent Investment
#2: Rajeev Misra and Marcelo Claure SoftBank
#3: Larry Illg Naspers Ventures
#4: Young Sohn Samsung Electronics
#5:Nagraj Kashyap Microsoft
#6: Jacqueline LeSage Krause Munich Re Ventures
#7: William Taranto Merck Global Health Innovation
#8: David Gilmour BP
#9: Michael Redding Accenture Ventures
#10: Anna Patterson Gradient Ventures
3. Alongside the awards and GCVI Summit at the end of January, Global Corporate Venturing (GCV) publishes its annual review of data and a survey of the industry trends and talking points in its World of Corporate Venturing 2019
The definitive guide to the industry
4. Published in 2018 but also in 2019’s list of most-read was a great interview by Robin Brinkworth with Mike Redding, head of Accenture Ventures:
I have been at Accenture, as you said, for a long time. I joined at the tail of the mainframe era, and now we are dead in the middle of the digital era. The evolution of Accenture has really been from a classic consultancy into a services partner for our enterprise clients. We have gone from these point technologies to the digital ecosystems which are the storylines of today, so we have had to reimagine ourselves.
The role we have at Accenture Ventures is to make sure that Accenture has a systematic approach to emerging and disruptive technologies. We announced our first blockchain investment two years ago, and now those first investments are starting to be deployed at scale. Everyone said: “Oh, blockchain is going to be important.” Accenture invested in Digital Asset Holdings’ blockchain platform, and the Australian Stock Exchange announced in December 2017 that they are going to replatform their exchange on to a digital asset-based architecture. Accenture is in the story because of Accenture Ventures working with our business to say: “We believe blockchain is the future. Where can we put a stake in the ground?”
Is Accenture Ventures primarily a financial vehicle for Accenture, or are strategy and innovation more important?
As you look at the spectrum of corporate venture plays, we wholeheartedly embrace the end of the spectrum that is corporate strategic. I do not do a deal unless I have a sponsor, who has a Accenture services business case that rationalises why we should invest in an individual company. Of course, we want to do well on the capital return, but we do not even estimate a potential return on equity when we consider the investment. We entirely base it on: “How does this drive the organic growth of our business?” If it is sufficient strategic growth, then we would consider the investment.
What does Accenture offer to potential portfolio companies beyond just the cash investment?
I always like to say that we should be nervous about any startup that needs Accenture’s money, as we are quite frankly nothing compared with the world-class VCs and corporate VCs that are out there. It is not about the cash, it is about the go-to-market. If you are a startup and your target customer base is the world’s biggest companies, would you not want to partner the number-one services firm that serves those companies?
5. GCV was honoured to work with the thought-leaders at Bell Mason Group on a book published at the start of 2019 as: “A lean, practical guide to developing high-performance Corporate Venturing (CV) programs. A compilation of ‘straight-talk’ rules around what matters most, why & when, with profiles of leading CV programs that demonstrate real impact and staying power.
“Corporate venturing has never mattered more. CV has earned a position of respect among portfolio companies and partners for the value it delivers; and CV leaders have a ‘seat at the table’ in setting corporate strategy, joining the handful of the highest-level executives who determine the company’s present and future course…But this is what hasn’t changed – corporate venturing is incredibly hard to do well, and in a way that lasts. Even when high performing teams closely follow the best practices derived from other programs’ models and professionals’ experiences, and impeccably execute everything required for program and team development, they are often impeded – even stopped dead in their tracks – by unpredictable events and decisions totally independent of their programs and outside of their control.
“The authors bring to bear decades of pioneering experience to create a ‘shorthand’ guide for CV professionals and parent company management as they craft and scale meaningful CV programs. It also provides valuable insight for the startup teams, as well as the many investment and business partners with which CV programs connect.”
By Heidi Mason, Liz Arrington, Jim Mawson Forward by Wendell Brooks, President, Intel Capital
6. Also highly-read were our sector profiles and coverage across the 10 industry verticals and in particular thanks to Tom Whitehouse for pulling together our coverage in the second quarter’s Corporate Venturing and the Future of Advanced Mobility & Energy supplement ahead of our GCV Energy conference held in Houston in November
7. Also at the tail end of 2018 but a story that grew through 2019 was Rob Lavine’s coverage of how Japan-headquartered telecommunications group NTT has raised $500m for a US-based corporate venturing fund, according to a regulatory filing.
The fund, NTT Venture Capital, is helmed by Vab Goel, who at the time was still listed as a general partner at Norwest Venture Partners, the VC firm entirely funded by financial services firm Wells Fargo.
Goel’s speciality areas include mobile, cloud, networking, security and internet technology. His investments at Norwest, which he joined in 2000, include cloud networking and security software provider Virtela, which was acquired by NTT for $525m in 2013.
The fund was initially announced by NTT in August 2018, at which time the firm said it would concentrate on global innovation and digital technology. Its capital was supplied by two partners, according to the filing.
NTT already makes investments through NTT Docomo Ventures, which operates as a subsidiary of its mobile division, NTT Docomo, and has formed three separate funds under the NTT Investment Partners banner which were equipped with a total of ¥45bn ($400m).
NTT Docomo Ventures is based in Japan but opened a US office in Silicon Valley in February 2017 and manages a $100m US fund called Docomo Capital that is overseen by managing director Neil Sadaranganey.
US investments made by NTT include identity management software provider Centrify, which was majority acquired by Thoma Bravo in July 2018. It is unclear whether Docomo Capital will collaborate with the new fund, which is operating out of a different Silicon Valley address.
8. The dismantling of much of General Electric’s highly-regarded venture team created opportunities for others and the formation of PTV International Ventures Americas (Piva), the US-based corporate venture capital subsidiary of Malaysia-headquartered petroleum supplier Petronas, which hired Bennett Cohen as a partner according to our news story.
Cohen had previously been a principal at Shell Ventures, the strategic investment subsidiary of oil and gas provider Shell. He joined the unit in 2015 and his areas of investment included blockchain, advanced cleantech and mobility technology.
Piva’s $250m fund targets early-stage, North America and Europe-based developers of artificial intelligence, machine learning, applied robotics, speciality chemicals, advanced materials and clean technologies centred on the industrial and energy sectors.
Ricardo Angel oversees Piva as chief executive and managing partner, having set up the unit in January this year on behalf of Petronas.
Angel had been a managing director at GE Ventures, the corporate venturing arm of industrial technology conglomerate General Electric, since 2013, before his departure earlier this year.
The Piva team also includes Adzmel Adznan, the former head of Piva’s predecessor, Petronas Technology Venture Capital, who joined in May as partner and operating manager.
The moves come after the departures of several senior members of the GE Ventures team, including Sue Siegel, Alex Tepper, Jessica Zeaske, Marianne Wu, Alex de Winter, Karen Kerr and Lisa Suennen.
9. For our annual GCV Awards, Katerra, which aims to revolutionise the construction sector with its technology, won mid-sized deal of the year and was profiled by Alice Tchernookova.
Speaking to Forbes in a recent interview, Katerra’s co-founder and executive chairman Michael Marks, who previously served as interim CEO at automotive company Tesla and as CEO of supply chain services Flex – previously Flexotronics – for 13 years, described the group as a fully integrated turnkey supplier that designs, engineers and constructs buildings, and whose goal is to streamline the entire building process with time and cost-efficient services.
Marks said: “While most construction projects involve hiring a developer who then subcontracts each task, from the walls to the countertops to the windows, Katerra is choosing to do it all.”
Katerra’s activity thus spans design, software and building engineering, manufacturing, supply chain and construction. The large-scale prefabricated structures produced by the group – such as wall panels with built-in windows, for instance – have already helped secure $1.3bn in bookings for new construction, spanning multi-family, student and senior housing as well as hospitality facilities, according to the group.
With a valuation now exceeding $3bn, Katerra recently benefited from a boost to its balance sheet, with telecoms and internet company SoftBank having led a $865m investment in the company last year, investing from its $100bn SoftBank Vision Fund. Other new investors in the series D round included global investment management firm Canada Pension Plan Investment Board, VC firm Navitas Capital, real estate group DivcoWest, Bahamas-based private investment firm Tavistock Group and another private investment fund managed by Soros Fund Management. Existing investors, meanwhile, included electronics manufacturer Foxconn, consumer internet investment group Greenoaks Capital, VC firms DFJ Growth and Khosla Ventures, and hedge fund Moore Capital Management.
The series D round, which was to fund Katerra’s manufacturing expansion and further investment in research and development, brought the total raised by the company since it was created in 2015 to $1.09bn. Previous rounds included a $130m series C provided by Foxconn, Greenoaks, Khosla, DFJ, Moore Capital and private investment management firm Paxion Capital Partners in 2017. The company, which had just emerged from stealth, was valued at around $1bn at the time.
Commenting on the series D, Jeffrey Housenbold, a managing partner at the SoftBank Vision Fund, who, as part of the transaction, joined Katerra’s board, said: “The $12 trillion construction industry is extremely fragmented with tens of thousands of companies using minimal levels of technology. While labour-productivity growth has skyrocketed in the overall global economy, construction]has averaged only 1% annual productivity growth over the past two decades.” In other words, as co-founder Marks put it, the sector is “ripe” for digital disruption.
Housenbold, who collected the award along with a GCV Rising Stars trophy, added: “Katerra is leveraging the latest technologies to radically transform the way people build. Drawing on his experience leading Flextronics, Marks’s unique vision and talented team are taking the great lessons of electronic manufacturing and applying them to an industry that is in dire need of change. We are excited to support Katerra as they expand across markets and geographies and unleash a new wave of productivity.”
10. Also at the GCV awards in January from Alice Tchernookova’s write-up saw Swisscom Digital Transformation Fund pick up the fundraising of the year for Swisscom Ventures’ first investment vehicle that is open to third-party institutional investors.
Founded in 2005 by recurring GCV Powerlist nominee Dominique Mégret, Swisscom Ventures is the corporate venture arm of Switzerland-based IT and telecoms group Swisscom – a government majority-owned company with a market cap of $24.6bn and a Forbes Top Regarded Company 2018.
Originally focused on strategic impact for its corporate parent, the entity invests across core telecoms and IT services, as well as in new technology with a potential to transform the company’s activity. More recently, Swisscom Ventures also took an interest in emerging technologies such as digital health, the internet of things (IoT), artificial intelligence, wearables and fintech. In 2016, the unit created a Sfr10m ($10m) dedicated fintech fund to provide early-stage and series A financing for startups operating in the areas of collaborative economy, access and identification, blockchain financial applications and digitisation of small and medium-sized enterprises. In addition to that, Swisscom promotes fintech startups through initiatives such as Kickstart Fintech Accelerator, DigitalZurich2025 or Swisscom Startup Challenge.
Swisscom Ventures manages two main funds. Its domestic Early Stage Fund backs startups in seed to series A stages. It usually starts with small entry tickets below Sfr1m and follows with additional investment of up to Sfr5m. Covering areas as diverse as digital media and cleantech, the fund aims to encourage the emergence of Swiss technology leaders by leveraging the country’s innovation centres and providing funding exclusively to Swiss companies.
The International Fund, invests in information and communication companies at every stage of development. Entry tickets usually vary between $500,000 and $1m and can be increased to $5m in subsequent rounds. With this vehicle, Swisscom Ventures typically co-invests alongside large VC firms able to finance a global market rollout. As of 2016, the unit had completed around 20 deals overseas, mostly in Silicon Valley.
Following an evergreen model, through which returns from deals are reinvested in new portfolio companies, the unit has a total investment capacity of Sfr10m to Sfr20m a year, according to Mégret. This amount is, however, likely to increase each year as more and more companies are sold by the unit. Between 2016 and 2018, Swisscom Ventures completed a dozen exits in a variety of sectors, including infrastructure and cloud, the internet of things, fintech, security and enterprise solutions.
By 2018, the venture arm had invested a total of $100m in about 50 startups since inception and closed around 20 exits. One of the most recent was the sale of Switzerland-based business software provider Bexio for a reported $110m last year. Some of the unit’s most recent investments include an $11m series B round co-led with private equity and VC firm ETF Partners for Swiss drone developer Flyability, and a $5m series A round for Bangalore-based cloud infrastructure startup Rtbrick, co-led with Deutsche Telekom Capital Partners.
A new addition to the Swisscom Ventures family of funds was made last year as the unit launched the Digital Transformation Fund – the first of its vehicles open to external backers. The parent company provided about a quarter of the total $199m raised for the oversubscribed fund, while the rest came from institutional investors. Targeting early to late-stage companies, the fund expects half its dealflow to arise from Switzerland and will also seek opportunities in the US, Europe and Israel. The vehicle emerged amid greater activity in Switzerland, as almost $940m was invested in local startups in 2017 – 3% more than the previous year. According to the Swiss Private Equity & Corporate Finance Association, local pension funds currently manage more than $800bn of assets, of which roughly 1.5% are invested in private equity and venture capital.
Perhaps peculiar to Swisscom’s case, as opposed to CVC arms spun out of their parent company after raising external money, Swisscom Ventures continued to operate as an in-house unit, maintaining a strategic traction with its corporate parent. Speaking to GCV in a past interview, Mégret said: “When we first started 10 years ago, it was all about strategic value creation, but with time, financial performance becomes more tangible. That is when you need to deliver financial value to remain credible. It then becomes a balancing act between the financial and strategic dimensions, between more or less mature businesses, and between core business areas like telecoms and IT and longer-term adjacent ones.”
He added: “Swisscom Ventures is a startup within a corporation. We see ourselves as a profit centre and try to achieve maximal impact with minimal team costs. This is key to being independent-thinking and long-term sustainable.”
As industry peers start to develop alternative models to leverage corporate cash with financial investors, finding the right mix of financial and strategic returns should indeed be a priority for the Swiss group.
A busy year with thousands of articles and so my thanks to the reporters, editors, production and all in the industry for your advice, contributions and support to GCV.