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Business Opportunity Through Corporate Venture Capital

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Presented at the Digital Ventures/Siam Commercial Bank Faster Future Fintech Forum (28 Feb 2017, Bangkok) by Paul Ark, Managing Director of Corporate Venture Capital of Digital Ventures

Publié dans : Technologie

Business Opportunity Through Corporate Venture Capital

  1. 1. BUSINESS OPPORTUNITY THROUGH CORPORATEVENTURE CAPITAL FASTER FUTURE FINTECH FORUM
  2. 2. “They suck! They are not interested in the company’s success or the entrepreneur’s success. Corporations exist to maximize their interests. They can never be menchy or magnanimous. It’s not in their DNA, and so they suck as investors.” - Fred Wilson of Union Square Ventures, on corporate venture capital CVC: VC’S MISUNDERSTOOD, LESS SEXY COUSIN?
  3. 3. GLOBALVC INVESTMENT ACTIVITY GLOBALVC INVESTMENT ACTIVITY ON THE RISE WITH 2015 BEING A RECORDYEAR $45 $64 $59 $65 $108 $141 $127 8,459 10,842 13,006 15,800 18,157 17,992 … 2010 2011 2012 2013 2014 2015 2016 GLOBALVC FINANCING Invested ($Bn) Deal count (#) Source: KPMG 13,655 $5.3M $5.9M $4.5M $4.1M $5.9M $7.8M $9.3MAVR. $/ROUND
  4. 4. 57% 12% 31% GLOBALVC INVESTMENT ACTIVITY GLOBALVC ACTIVITY HAS NEARLY DOUBLED FROM 2013 TO 2016 $127.4BN INVESTED 13,665 DEALS 2016 AMERICAS § $72BN INVESTED § 8642 DEALS EUROPE § $16BN INVESTED § 3142 DEALS ASIA § $39BN INVESTED § 1742 DEALS Source: KPMG
  5. 5. CORPORATEVENTURING BY THE NUMBERS CORPORATE INVESTMENT ACTIVITY HAS RISEN SHARPLY OVER THE PAST 5YEARS Source: Forbes, KPMG, CB Insights NUMBER OF GLOBAL ACTIVE CORPORATE INVESTORS IN 2016 965 3x 75% INCREASE IN GLOBAL ACTIVE CORPORATE INVESTORS PERCENTAGE OF FORTUNE 100 ENGAGED IN CORPORATE INVESTING NUMBER OF PATENTS PER DOLLAR INVESTED VS. IN-HOUSE R&D 3x 32% PERCENTAGE OF CVC FUNDINGTO ALL STARTUP FUNDRAISINGS
  6. 6. CORPORATEVENTURE INVESTMENTVOLUME Source: CB Insights CORPORATES PLAYING AN INCREASINGLY PROMINENT ROLE INVENTURE FUNDING 9.7 16.9 29.1 12.7 31.9 54.1 71.3 26.4 23% 24% 29% 32% 2013 2014 2015 1H2016 CVC FUNDING CONTRIBUTION ($BN) Other Funding ($Bn) CVC Funding ($Bn) CVC Funding to Total Funding (%) 960 1260 1365 633 4902 5475 5753 2480 16% 19% 19% 20% 2013 2014 2015 1H2016 CVC PARTICIPATED DEALS (#) No CVC Deals (#) CVC Partipated Deals (#) CVC Deals to Total Deals (%)
  7. 7. WHO ARE THESE CORPORATEVENTURERS? A WIDE ARRAY OF INSTUTIONS SPANNING TECH, HEALTH CARE, FINANCE,AUTO, FMCG, ENERGY & MEDIA HAVE JOINED THEVC SPHERE TO FOSTER INNOVATION
  8. 8. THAI CVC AS A DRIVER OF INNOVATION IN 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 Wave 2: FinancialWave 1: Telcom Wave 3: Industry
  9. 9. STRATEGIC REASONS FOR CVC THERE ARE AVARIETY OF STRATEGIC REASONS FOR COMPANIES TO ENGAGE IN CORPORATEVENTURING, AND MANY WAYS TO MEASURE STRATEGIC RETURNS FROM SUCH ACTIVITY SOURCE NEW PRODUCTS & SERVICES OUTSOURCE R&D NURTURE ECOSYSTEM & STIMULATE INNOVATION SOURCE ACQUISITION TARGETS KNOWLEDGE ACQUISITION & TRANSFER RECRUIT, DEVELOP & MOTIVATE TALENT
  10. 10. COMPARISON: FINANCIALVS. CORPORATEVC FUND OBJECTIVE CONTROL PREFERENCE VALUE CREATION Financial return FINANCIALVC CORPORATEVC 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
  11. 11. CORPORATEVENTURING CHALLENGES • DECISION MAKING PROCESS & SPEED • TIME & COST OF IMPLEMENTATION • COMMITMENT & LONGEVITY • ALIGNMENT B/W CORPORATE & STARTUP • EXCLUSIVITY • COMMAND & CONTROL • FINANCIALVS. STRATEGIC RETURNS • VALUE ADD & EXTRACTION • TYPE & TIMING OF EXIT • ALIGNMENT B/W CORPORATE &VCs • COMPENSATION & CARRY • RECRUITMENT & RETENTION TALENT RETURNS ORGANIZATIONCULTURE
  12. 12. FASTER FUTURE FINTECH FORUM

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