168
Chapter8.CorporateVenturingBytheNumbers–AnandSanwal&JonathanSherry,co-foundersofCBInsights“Successbreedscomplacency.Complacencybreedsfailure.Onlytheparanoidsurvive.”-AndyGrove"Seektruthfromfacts"firstappearedintheBookofHanandwaslatermadefamouswhen quoted by Mao Zedong and later Deng Xiaoping. Here in this book, we godirecttothesourceoftheactivityandprovideinsightsfromthekeypractitioners.Thischapterletsthefactsspeakforthemselves.AnandSanwalandJonathanSherryat CB Insights were cool enough to share their quantitative research and leaguetablesforyoutounderstandcorporateventuringbythedataandfacts.Moreinfoatwww.cbinsights.com.ThenumberofactiveCVCsnearlydoubledfromQ3’12toQ3’15.Arecord185corporateVCfirmscompletedaninvestmentinQ3’15,representinga31%year-on-yearincreaseandajumpof97%fromthe94firmsmakinganinvestmentinQ3’12.
In2015,126uniqueCVCarmsparticipatedinatleastoneseedVCroundworldwide.Thatrepresentsafourfoldincreasefromthe30corporateVCswhocompletedsuchdealsin2011.
169
85newcorporateVCunitsgloballymadetheirfirstininvestmentin2015,includingnotablenamessuchasTwitterVenturesandWorkdayVentures.Thiscontinuesasteadilyupwardmarchinnewparticipantssince2010.
Themostactivecorporateventurecapitalgroups.IntelCapitalledallCVCsinglobalactivity,investinginmorethan75companies,roughly18%morethansecond-placeGV(GoogleVentures).Theyhavebeenaggressivelyinvestingabroad,withabout32%oftheir2015investmentsmadeincompaniesoutsidetheUS.
170
*Includesinvestmentsin2016YTD.NoteRubiconVentureCapitalco-investedwithIntelCapitaintoLISNR.2015 saw corporate VC investors participate in $28.4bn of funding across 1,301deals,topping2014’srecordnumbers.However,asoverallventureactivityslowedinQ4’15, corporatespulledback aswell,withdeal activitydropping to its lowestlevelsinceQ1’14.
NorthAmericanstartupstookoverhalfofthedealswithCVCparticipationineachofthefivequartersanalyzed.However,NorthAmericandealsharesteadilydroppedthroughout2015,withno.2Asiaandno.3Europebothseeingupticksindealshare.
171
Q1’15representeda5-quarterlowforearly-stage(seed/SeriesA)CVCactivity,withdealsdroppingto43%whileSeriesD+roseto14%ofthetotal.However,byQ4’15late-stagedealshadpulledbackto10%ofCVCdeals,whileearly-stagedealsreboundedto50%.
Despitefluctuationsinabsoluteshare,theinternetsectorremainedthetoprecipientofglobalCVCdeals,taking48%oftheminQ4’15.Dealsharetomobile&telecomstartupstoppedtheshareforhealthcarein4outofthepast5quarters.Despitefluctuationsinabsoluteshare,theinternetsectorremainedthetoprecipientofglobalCVCdeals,taking48%oftheminQ4’15.Dealsharetomobile&telecomstartupstoppedtheshareforhealthcarein4outofthepast5quarters.
172
Beyonddedicatedventurearms,corporationsthemselvesarealsofunnelingdollarsdirectlytoVC-backedstartups.LedinactivitybyChineseheavyweightslikeTencentandAlibaba,corporatesparticipatedin668dealsthatrepresented$26.9bnoffundingin2015*.
ThemostactivecorporateventurecapitalgroupsinvestingintheUS.WithaUS-centricportfolio,GVtradedplaceswithgloballeaderIntelCapitaltoclaimthetopspothere.SalesforcealsoswappedplaceswithQualcommVenturestoplacethird.
173
CountryRecaps:UK,ChinaandIndiaCVCstookpartin$1.7bnofinvestmentacross41dealstoUK-basedprivatecompaniesin2015,representingasharprisefrom2011(22dealsand$203M).Someoftheyear’slargestdealsincludeJuly’s$460mSeriesHtoO3BNetworksanda$320mfinancingtoImmunocore.
Corporateventureunitsparticipatedin$6.2bnoffinancingsacross66dealsinChina,risingfromjust$910mand57dealsin2014.CVCswereprominentin
174
megadeals,includingan$850mSeriesEtoDianpinginAprilanda$2bnSeriesFtoDidiKuaidiinJuly.
CVCactivityrecededinIndiain2015,downfrom$443mand29dealsin2014to$421macross24deals.Q3’15wasastrongquarter,with10deals,butfundingwasdrivenbya$100mroundtohomefurnisherPepperfryanda$90mroundtodoctorsearchportalPracto.
QualcommhasbeenactivelysourcinginvestmentsfromoutsidetheUS,rankinginthetop5investorsineachofthesemarketssince2011.IntelwasthemostactiveinbothChinaandIndia,whileBertelsmann’sinvestmentarmsalsomakeappearances.
175
CorporateVCsparticipatedin806dealsrepresenting$17.4bnoffundingtoUS-basedcompaniesin2015.Fundingdollarsrose33%intheyear,butdealgrowthnearlyflat-linedatjust2%.TheQ4’15year-endslowdownsawthefewestCVC-backeddealssinceQ4’13.
CaliforniatakesoverhalfofUSCVCdealsin2015.AsidefromaQ1’15diptobelow50%share,theGoldenStatecontinuedtodominateUSCVCdealactivity,securing51%ofUSdealswithCVCinvolvementin2015overall.NewYorkedgedoutMassachusettsbyasingledealtosecuresecondplacefortheyear.
176
SeriesBactivityonlymadeup17%ofUSCVCdealsinQ4’14,butgrewto28%inQ4’15.Mid-stage(SeriesBandC)tooka38%shareinthatquarter.ApartfromapeakinQ3’15,seed/angelactivitytookunder20%ofdealsdonebyCVCarmsintheUSin2015.
HowdoescorporateventurecapitalmeasureuptothegreaterVCecosystem?CVCsparticipateinafifthofallVCdealsin2015.Corporateventurefirmsparticipatedin19.3%ofthe6,743venture-backedfinancingroundsin2015,comparedtoaparticipationrateofjust16.5%in2013.
177
Onaquarterlybasis,CVCdealsharetoppedoutat21%inQ3’15,whichwasthefrothypeakforVCfundingoverall.
CVCdealsizescontinuetooutpaceVCoverall.AveragedealsizewithCVCparticipationhastopped$21m+for3consecutivequarters,includingaQ3’15spikebolsteredbymonsterdealstoDidiKuaidiandSoFi(amongothers).
178
TheaveragesizeofdealswithCVCparticipationwaslargerthanoverallUSVCdeals,mirroringtheglobalpattern.TheaveragesizeofdealswithCVCinvestorsstayedunder$16mthroughout2013,butwasabove$21minfinal3quartersof2015.
Since2011,KleinerPerkins,NEA,andAndreesenHorowitzhavecompletedthemostdealsalongsideacorporateventurearm.
179
IntelCapitalrankedfirstbynumberoftechexitsforthethirdstraightyear.Ithadmorethandoubletheexitsofsecond-placeGV.
ComparingselecttechCVCs
180
ComparingselecthealthcareCVCs
ComparingselectmediaCVCs
181
ComparingselecttelecomCVCs
ComparingselectfintechCVCs
182
100MostActiveCorporateVentureCapitalFirmsof2015(global)
100MostActiveCorporateVentureCapitalFirmsof2015(US)
183
Top Related