Corporate Venturing Report 2019

Corporate Venturing 2019 Report

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TABLE OF CONTENTS LEAD AUTHORS

03 Forewords Joshua G. Eckblad 06 All Investors In External Startups [email protected] 21 Corporate VC Investors https://www.corporateventuringresearch.org/ 38 Accelerator Investors CentER PhD Candidate, Department of Management 43 2018 Global Startup Fundraising Survey (Our Results) Tilburg School of Economics and Management (TiSEM) Tilburg University, The Netherlands 56 2019 Global Startup Fundraising Survey (Please Distribute)

Dr. Tobias Gutmann

[email protected] https://www.corporateventuringresearch.org/ LEGAL DISCLAIMER Post-Doctoral Researcher Dr. Ing. h.c. F. Porsche AG Chair of Strategic Management and Digital Entrepreneurship The information contained herein is for the prospects of speciﬁc companies. While HHL Leipzig Graduate School of Management, Germany general guidance on matters of interest, and every attempt has been made to ensure that intended for the personal use of the reader the information contained in this report has only. The analyses and conclusions are been obtained and arranged with due care, Christian Lindener based on publicly available information, Wayra is not responsible for any Pitchbook, CBInsights and information inaccuracies, errors or omissions contained [email protected] provided in the course of recent surveys in or relating to, this information. No Managing Director with a sample of startups and corporate information herein may be replicated Wayra Germany ﬁrms. without prior consent by Wayra.

Wayra Germany GmbH (“Wayra”) accepts no Wayra Germany GmbH liability for any actions taken as response Kauﬁngerstraße 15 hereto. Wayra does not make investment 80331 München Please distribute and cite our work: recommendations, and nothing in this +49 89 414141 012 Eckblad, J., Gutmann, T., & Lindener, C. (2019, July 15). Report report should be interpreted as an opinion [email protected] on Global Corporate Venturing Research Data. Retrieved from by Wayra either on market forecasts or on http://de.wayra.co/ https://www.corporateventuringresearch.org/

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THE SHIFT EVIDENCED

When I set out to revamp Wayra Germany in 2017, I had no But since both worlds are very different, and hardly anyone idea that the time for innovation vehicles being questioned has an overview of what is needed on the one side and what had come — it was just common sense to build an is offered on the other, the achievement of these goals is far innovation vehicle that impacts the Group. Since relaunching away. Of the more than 150 innovation hubs, perhaps 2 or 3 our vehicle towards an impact-driven approach, the are actually successful. innovation world has seen a brutal shift towards models that really pay into the growth and success of the mother „While Digital Innovation Units are becoming more mature, company. business traction is still very limited. “

I am a practitioner — I have experience building and running That is not a surprise. Looking at the numbers, it is close to corporate innovation programs. This report gives a reliable, impossible to develop within a new unit the significant data-driven view of how innovation vehicles are evolving and innovations that an established company needs to survive. that investing in startup technologies has to be on every By giving up the competitive advantages and strengths of digital transformation agenda since this has become a the core business, corporate startups also face the same valuable source for innovation. chances for success as every other startup out there. In a recent study, Bain & Company found that only 1 out of I am very proud of what Joshua and Tobias have created 17,000 startups in the US reach 500 million USD and with this report in terms of the quantity of data analyzed and profitable growth — these are the conditions of added value the quality of insights based on real-world understanding. that an established firm actually needs. Thanks for pulling me in on this journey and for the opportunity to validate it from the practitioner’s perspective! Looking at these numbers, the operating model for innovation hubs seems dead, and I predict that the bubble With innovation becoming more and more important, but will burst soon. also more and more complex for established companies, firms apply a seemingly simple tactic for success. Every year But innovation remains a number one priority for most more and more firms set up separate innovation labs, hubs companies. To increase the satisfaction with innovation and accelerators to invest in start-ups or to set up their own performance that generates real business impact, a new ventures. These various modes are expected to offer operating model is required. Investing heavily in startups companies new innovations, cultural changes and improved brings value to most firms, nevertheless orchestrating all brand images by aligning the two worlds (corporates and innovation approaches: outside-in, inside-in and inside-out startups). will help realize more of the potential. This is the first step towards the right direction as corporate firms continue to invest significantly in startups.

Christian Lindener Managing Director Wayra Germany [email protected]

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LET THE DATA SPEAK!

We are excited to share this data-driven report on corporate The data presented in this report illustrate how there has venturing with you, which sheds light on the state-of-the-art. been a sharp rise in the number of newly-founded corporate This research presents meaningful insights using a broad VCs since 2016. In addition, we found that 65 percent of coverage of data sources and data points. active (engaged) corporate VCs were launched after 2010. This is a remarkable development, as the rapid rise of some I feel very privileged to be both a researcher and a corporate VC units suggests important differences between practitioner of corporate venturing. Having seen numerous low and high performing corporate venturing units. High startups and companies ride the crest of the corporate performing units are delivering value to startup ventures venturing wave, I am breathing my passion for corporate and may enjoy a competitive advantage. ﬁrms’ search to spur future growth. In addition, my professional experience in corporate Some practitioners have been skeptical about corporate venturing was focused mainly on certain markets (e.g., US, venturing, even going as far as describing this phenomenon Israel, and Europe), and so the data in this report on the as "corporate innovation theatre”. However, established rapid rise of Asia-based corporate VCs was particuarly companies engage in a multitude of activities to accelerate surprsing to me. For example, six out of ten of the most innovation and new business creation. Hence, corporate active corporate VCs in 2018 are based in Asia. This signals venturing activities are gaining more and more attention high levels of available capital, vast numbers of startup from researchers and practitioners – a phenomenon ventures being created, and disproportionate access to sometimes described as the resurgence of a ‘golden age’. enabling technologies. Within just a few years, the corporate venturing landscape has changed: (1) more and more established companies Roughly two years ago, Joshua G. Eckblad and I joined invest increasing amounts of capital into corporate forces with a long-term mission to… venturing activities, (2) new corporate venturing modes are becoming more prevalent, and (3) corporations are • Build the leading insight engine into corporate venturing reﬂecting on the performance of their current venturing activities strategies. • Bridge the gap between research and practice in corporate venturing

• Boost knowledge and provide valuable insights to practitioners engaged in corporate venturing

Dr. Tobias Gutmann Post-Doctoral Researcher [email protected]

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THE REPORT

The report delves into the most recent data on global investments Then, increasing the scope to a global scale exacerbates these • Investor type in external startups, made by outside-in corporate venturing units. gaps in data collection coverage. For this reason, our regression • Investor year founded These units are on the rise and becoming increasingly active. US- analyses are based on representative samples of active investors, • Portfolio startup business stage based corporate VCs in 2018, for example, made the majority of for which we have complete data on all individual observations to • Portfolio startup count total investments in external startups for the first time (PitchBook ensure internal consistency and to reduce the chance of biased • Portfolio startup exit Analyst Note: The Golden Mean of Corporate Venture Capital, statistical estimates. • Portfolio startup primary industry group 2019). • Portfolio startup primary industry sector We present our analysis using seven parallel approaches: • Startup evaluation of engagement with corporate investors The term “external corporate venturing” embodies a set of distinct • Startup perceptions of smart capital investors (all investor modes that corporate firms use to engage with innovative, classes) external startups. These modes, among others, include corporate • Population-level snapshot of investment behaviors • Startup preferences for smart capital (all dimensions) venture capital (CVC), corporate accelerators, corporate innovation • Longitudinal view of investment behaviors by year labs, and direct corporate minority investments. • Segmentation of investment behaviors by global region • Sample of top 1000 investors (all types) The report covers two equity-based, outside-in corporate • Sample of 166 engaged corporate VCs venturing modes: corporate VC and corporate accelerators. Also, • Sample of top 93 accelerators given the interdependent investment relationship between • Sample of 60 startups and portfolio companies corporate and private investors (i.e., private venture capital (VC) and private accelerators), we include an analysis of these investor classes in the first and last part of the report to provide context Main variables examined in the report: for external corporate venturing activities.

Significant discrepancies exist between various industry data • Capital invested ($USD) sources on external corporate venturing, so every attempt is • Deal count made to emphasize recent trends rather than absolute numerical • Deal type datapoints. The fact that datasets differ is not so much an issue • Destination of capital invested of quality, but more a reflection of complexity. Collecting sensitive, • Investment count strategic data that is internal to corporate firms is sometimes • Investor age incomplete in the first place. • Investor HQ country

Joshua G. Eckblad CentER PhD Candidate, Department of Management [email protected] https://www.corporateventuringresearch.org/

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Venture Financial Liquidity: Total Capital Invested &

Deal Count US$700B 30.000 (All Investor Types)

1999-2017 US$467B 20.000

Ascending Investments in External Startups Deal Count

US$233B 10.000 The two-axis figure depicts the rise in capital invested and deals made in external startups between 1999 2017and, by private and corporate investors around the USdollars) billion (in Invested Capital globe.

There are numerous inflection points, but 2009 appears to be an important moment after which both capital invested and deal counts have intensified, rapidly. US$0B 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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1500 Investment Deals

Top 1000 Global Investors Past 5 Years )

2014-2018 Past 5 Years 5 Past

Investments are Precious

Very few of the Top Global Investors on our list made ~1,500 investments in external startups, whereas 72 percent of Top Investors made between 43 and 100 investments in external startups over the past 5 years (Power Law Deal Count ( Distribution). <100 Invest. 43 Invest.

The four most active global investors in external startups during this period happen to be private accelerators: Y Combinator, 500 Startups, Plug and 72% Play, and Techstars.

Top 1000 Global Investors (2014-2018)

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78 Top Investors Founded in 2012

Top Investors are Fresh Entrants

The majority of the Top Global Investors on our list were founded after 2001. There are numerous inflection points over the course of history, but 2008 appears to be an important moment after which first-time investors in external startups rose rapidly to prominence. In fact, nearly 8 percent of Top Global Investors on our list were founded in 2012 alone.

1924 Founded 2000 2018

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Share of Investment Count, by Investor Type Private Venture Capital 59 %

Private VCs Occupy a Privileged, Unique Position

Private venture capitalists (VCs) as a group made 59 percent of the total number of investment deals out of our list of top 1000 global investors, although four private accelerators made the greatest volume of investments in external startups over the past 5 years.

The dominant position of private VCs in capital markets reflects their priviledged and unique access to external startups. Private VCs may sometimes react to the signals of startup quality that emanate from prominent private accelerators (private acceleration typically precedes private VC investments). However, for the most part, private VCs rely on their own established, proprietary due diligence routines to source prospective high-quality startups. In contrast, corporate firms are routinely guided by prior private VC evaluations of a given external startup to source their deal pipelines for both corporate VCs and corporate accelerators. While private accelerator investments typically precede private VC investments in target startups, corporate VC investments are almost always made in partnership with a private VC in a later capital fundraising round. Corporate Venture Capital This dynamic helps to explain, in part, the crucial role of private VCs within investment syndicates. The term “investment syndicates” refers 5,5 % to where multiple types of investors co-invest in a particular startup's Accelerator/Incubator capital fundraising round. Active, private VCs are more likely to attract 19,8 % the attention of high-quality startups and act as lead investor, which affords private VCs more bargaining power relative to other investor classes.

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US-based Top Investors Made 67,159 Investments Between 2014-2018

California-based Top Investors Made 39,991 Investments (2014-2018)

(571 Top Investors Based in the USA)

NB: Each circle on the map indicates the location of a Top Investor’s HQ

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Silicon Valley-based Top Investors Made 12,600 Investments Between 2014-2018

California-based Top Investors Made 39,991 Investments (2014-2018)

(338 Top Investors Based in California)

NB: Each circle on the map indicates the location of a Top Investor’s HQ

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London-based Top Investors Made 5,824 Investments Berlin-based Top Investors Made 1,096 Investments (79 Top Investors Based in UK) (26 Top Investors Based in Germany)

Paris-based Top Investors Made 4,550 Investments Amsterdam-based Top Investors Made 507 Investments (56 Top Investors Based in France) (9 Top Investors Based in NL)

EUROPE Top Investors HQ in The Netherlands Between 2014-2018

AlpInvest (267 investments) RockStart Accelerator (150 investments) KIC InnoEnergy (82 investments) Oost NL (67 investments) Brabantse Ontwikkelings Maatschappij (59 investments) Shell Ventures (49 investments) Merck Ventures (46 investments) Yes!Delft (45 investments) Life Sciences Partners (44 investments) NB: Each circle on the map indicates the location of a Top Investor’s HQ

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EUROPE

All Netherlands-based Investors

(All Investor Types) / Amsterdam-based Top Investors Made 507 Investments (9 Top Investors Based in NL) Primary Industry Sector Targets (Past 20 Years)

Information Technology 26 % Information Technology B2B 14 % 16 %

Global B2C B2B B2C Deal 13 % Global Materials & Resources 16 % 28 % 11 % Count Capital Healthcare Investments 8 % Healthcare Materials & Resources 12 % 4 % Financial Services Energy Financial Services Energy 19 % 9 % 5 % 19 %

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ASIA

Asia-based Investors Top Investors HQ in Asia* Beijing-based Top Investors Made 2,538 Investments (≳100 Investments Past 5 Years) (26 Top Investors Based in Beijing) (Past 20 years) China-based Top Investors Made 4,694 Investments IDG Capital Hillhouse Capital Group (51 Top Investors Based in China) Qiming Venture Partners Samsung Venture Temasek Holdings Investment Sequoia Capital China Legend Capital Matrix Partners China Global Brain 30,420 40,690 ZhenFund Horizons Ventures Startups Deals Sequoia Capital India Morningside Group 500 Startups (SE Asia) GSR Ventures SAIF Partners Blume Venture Advisors East Ventures Susquehanna Asia Northern Light Venture Investments Capital Axilor Ventures 15,130 12,946 Shunwei Capital Chiratae Ventures Exits Investors Brand Capital

*Total capital invested by Asia-based investors has grown year-to-year since 2010. There are 102 Top Investors based in Asia with investment counts over the past 5 years that range between 43 and 333. $2.90Tn There were 24 Asia-based Investors with 100 or more Capital Invst. Singapore-based Top Investors Made 909 Investments investment deals made between 2014 and 2018. (10 Top Investors Based in Singapore)

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IDG Capital Hillhouse Capital Group Kae Capital Yunfeng Capital Temasek Holdings Cherubic Ventures Ceyuan Ventures Vertex Ventures China Qiming Venture Partners SoftBank Ventures Asia QF Capital Lanchi Ventures Korea Investment Partners Inﬁnity Ventures Morningside Venture Capital Baidu Ventures SAIF Partners EDBI Digital Garage (TKS: 4819) India Quotient Sequoia Capital China Chiratae Ventures Source Code Capital SBI Investment Brand Capital Indian Angel Network SparkLabs Tisiwi ASIA Matrix Partners China Innovation Network Corporation SBI Holdings (TKS: 8473) Spiral Ventures Samsung Venture Investment of Japan NTT Docomo Ventures Vive X Accelerator Northern Light Venture Capital Nissay Capital Recruit Strategic Partners Legend Star Jafco (TKS: 8595) UMC Capital Beenext (Singapore) Yunqi Partners Top Investors Sequoia Capital India Mumbai Angels Baidu (NAS: BIDU) The Malaysian Global Innovation ZhenFund Cowin Capital K2VC and Creativity Centre - MaGIC Legend Capital Gobi Ventures GMO VenturePartners DSC Investment (KRX: 241520) Headquartered in Asia Morningside Group Fortune Capital GREE Ventures (TKS: 3632) Linear Venture East Ventures Mitsubishi UFJ Capital Ping An Ventures Vertex Ventures SE Asia & India Susquehanna Asia Investments China Growth Capital Golden Gate Ventures Vectr Ventures GSR Ventures Mizuho Capital Partners Lilly Asia Ventures Rakuten Capital (Total Investments >46, Past 20 Years, Ordered) 500 Startups (SE Asia) SB China Venture Capital Jungle Ventures China Media Capital Horizons Ventures Kalaari Capital Gaorong Capital Hatcher Plus Blume Venture Advisors Kakao Ventures Fresco Capital Vision Capital (China) Shunwei Capital SMBC Venture Capital Malaysia Venture Capital SPARX Group Company (TKS: CDH Investments Lightspeed Venture Partners Management 8739) CyberAgent Ventures (TKS: China China Everbright (HKG: 00165) 3one4 Capital 4751) Matrix Partners India China Broadband Capital Frees Fund Global Brain Axilor Ventures Partners Venture Catalysts (Mumbai) CITIC Capital Zone Startups India Bertelsmann Asia Investments Fosun RZ Capital Shenzhen Capital Group Singtel Innov8 Chengwei Capital Ally Bridge Group

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500 Startups Idinvest Partners Tiger Global Amadeus Capital Eurzeo Societe Generale New Enterprise Redpoint Ventures Management Partners Vivo Capital JP Morgan Asset Associates Alpinvest Partners Permira Invesco Deerfield Management Management Plug and Play Tech Matrix Partners Walden International L Catterton Blume Venture Advisors Softbank Ventures Asia Center Insight Venture Partners Matrix Partners China ACE & Company Entrepreneur First Harbert Management Intel Capital Highland Capital VantagePoint Capital Mitsui Global Oracle Infinity Ventures Kleiner Perkins Partners Partners Investment Rocket internet FinTech Innovation Lab ASIA 3i Group DCM Ventrures JLABS Nexus Venture Partners Bank of America The D.E. Shaw Group Accel H.I>G Capital Baird Capital WI Harper Group Brookfield Asset EDBI Sequoia Capital Caisse de depot et Johnson&Johnson Quilvest Private Equity Management Atomico Kohlberg Kravis Roberts placement du Quebec Innovation (JJDC) Worldview Technology Global Founders Capital CDC Group Top Investors with Bessemer Venture General Atlantic Next47 Partners Intel Oxford Technology Partners Qualcomm Ventures e.ventures Oxford Bioscience Formation 8 Management Warburg Pincus Temasek Holdings Samsung Venture Partners Artesian Capital Tianxing Capital an Asia Office SOSV OrbiMed Investment East Ventures Management Giza Venture Capital Greylock Partners Ontario Teachers’ TPG Growth Susquehanna Asia Sinovation Ventures Chiratae Ventures Apax Partners Pension Plan Adam Street Partners Investments Shunwei Capital Helion Venture Partners Miscrosoft ScaleUp GGV Capital Numa Altos Ventures CDH Investments Indian Angel Network (Total Investments >100, Past 20 Years, Ordered) Advent International Bain Capital Ventures Northern Light Venture GSR Ventures OurCrowd Nissay Capital Ardian Qiming Venture Capital Google Developers CyberAgent Ventures Innovation Network Startupbootcamp Partners Jafco Launchpad Global Brain Corporation of Japan Bain Capital Omidyar Network Sequoia Capital India Mountain Partners Investec Draper Nexus Village Capital Korea Investment ZhenFund Iris Capital Shenzhen Capital Group Artiman Ventures Keiretsu Forum Partners Eight Roads 500 Startups (SE Asia) ChinaRock Capital UMC Capital Norwest Venture Wavemaker Partners Foresight Group Horizons Ventures Management Wellington Partners SAIF Partners Legend Capital BlackRock Private CITIC Capital Management Scottish Enterprises Sequoia Capital China BlueRun Ventures Equity Partners UpHonest Capital Harbert Credit Solutions Canaan Partners Cisco Investments Ventech EW Healthcare Partners Hillhouse Capital Group Mumbai Angels Mayfield Fund Brand Capital Morningside Group Entrepreneur Venture Cherubic Ventures Fenox Venture Capital IDG Capital Morgan Stanley Northgate Capital Cowin Capital

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ASIA All Asia-based Investors (All Investor Types) / Destination of Capital (Past 20 Years)

Beijing-based Top Investors Made 2,538 Investments (26 Top Investors Based in Beijing)

China Asia UK 26 % 58 % Germany India 44 % 8 % Asia-based Asia-based Asia-based 17 % Russia Other Countries Investors’ Investors’ Investors' Destination Capital 6 % 13 % Destination Capital Invested Deal Count France Investments in Europe Malaysia 5 % USA USA 4 % Switzerland 15 % Other Regions 16 % South Korea 12 % Other European 5 % Europe 4 % 18 % Portugal 8 % Europe Singapore 4 % 5 % 14 % Italy Japan 3 % 8 % Ireland 3 % Netherlands SUMMIT@RSM 3 %

By Deal Type

Early Stage Growth/Expansion 6 % Early Stage 42 % LBO 10 % 21 % Growth/Expansion 6 % Asia-based Later Stage Asia-based Investors’ LBO Investors' 17 % Capital 3 % Deal Count ASIA Invested Later Stage Other 17 % 17 % All Asia-based Investors Seed Other Angel 12 % 45 % 3 % (All Investor Types) / Destination of Capital By Primary Industry Sector

(Past 20 Years) Information Technology Information Technology 45 % 33 % Beijing-based Top Investors Made 2,538 Investments Asia-based (26 Top Investors Based in Beijing) Asia-based B2C Investors' Investors' 21 % Global Capital Global Deal B2B B2C Investments 12 % 21 % Count B2B Materials & Resources 16 % Healthcare 1 % 10 % Healthcare Materials & Resources Financial Services 11 % 1 % Energy 15 % 8 % Financial Services 4 % Energy 2 %

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Corporate VC Investments CVC Deal Participation As a Share of Total 23 % Investors’ Capital In 2018

Growing Corporate VC Investments

Corporate VCs as a group were involved in 23 percent of all investment deals made in external startups in 2018. This represents the highest rate of participation on record to date.

Please note that corporate VC investments in a given external startup are almost always made in partnership with at least one private VC, who typically takes the role as lead investor. The absolute numbers provided inside the figure vary based on the industry data sources used, but the trends toward higher levels of capital invested and higher volumes of investment deals are clearly visible and substantiated (see next page).

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Corporate VC Investor Trends 2013-2018

Corporate VC Investments New Corporate VCs Founded

E.g., Coinbase Ventures, 264 Maersk Growth, Porsche Newly-Founded 2.740 Ventures Corporate VCs

2.068 $53,0B

1.705 Sharp Rise in Fresh Growing Corporate VC 1.581 Corporate VC Entrants Investments 64 1.390 Newly-Founded $36,1B There are numerous inflection Corporate VCs The trends toward higher levels points since 1960, but 2013 $31,3B of capital invested and higher $29,1B appears to be an important volumes of investment deals are 1.029 moment after which the number clearly visible. Between 2013 of first-time corporate VC and 2018, corporate VCs $18,4B investors rose rapidly. In 2018 increased capital expenditures alone, there were at least 264 by at least 400 percent, and newly-founded corporate VCs. corporate VCs engaged in at $10,6B This respresents the highest least 166 percent more deals in number of corporate VC external startups. entrants in a given year.

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

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Corporate VC Investors (All) 2000-2018 (Years Aggregated)

Deal Count Country Deal Count Region Deal Count Industry Deal Count Type

B2B 13,0%

Energy USA USA B2C 2,8% Early Stage 56,8% 56,8% 14,0% Financial Services 53,9% Healthcare 1,8% 18,7% Materials and Resources 1,3% Germany 5,3% Other China Other ⬆(2018: 244-351) 4,0% Europe 5,1% Other Later Stage 10 % 20,7% Canada Information Technology 10,0% 36,3% UK 3,9% Sweden 4,4% 48,4% 1,1% Asia Canada ⬆(2018) 14,5% South Korea 3,9% 1,5% Japan France 3,0% 1,9% India Spain 2,4% 2,0% Israel 2,1% SUMMIT@RSM

Corporate VC Investors (All) 2000-2018 (Years Aggregated)

Capital Invested Capital Invested Region Capital Invested Industry Capital Invested Type

B2B 10,1% Energy Later Stage USA USA B2C 6,5% 57,6% 19,0% 44,9% 66,4% Financial Services 3,1% Materials and Resources Healthcare 1% 19,2% China ⬆(2018) 15,5% Europe Other 17,2% 9,5% Other Germany 12% 4,3% Other Asia Information Technology Early Stage 6,5% 10,1% 41,0% 25,5% France UK 0,9% 3,5% ⬆(2018: 20.4—49.3%)

Denmark India 1% 2,5% Israel Canada 1% 1% Japan 1%

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Corporate VC Investments By Primary Industry Group/Sector 900

Internet / Software 1999-2018 ($21.2B Capital Invested in 2018) 675

Rise of Investments in Artiﬁcial Intelligence (AI) 450 AI deals with Corporate VC participation continue to increase year-to-year, with Asia-based startups soon to receive greater investments than their US-based counterparts. Out of all AI invested capital by corporate VCs in 2018, 44 percent went to US-based 225 startups, 42 percent went to Asia-based startups, Number of Corporate VC Investments VC NumberofCorporate and 13 percent went to Europe-based startups.

Whereas in 2013, corporate VCs invested virtually nothing in AI startups, by 2018 $5.1B was invested (~10 percent of all corporate VC investments). 0

Retail Media Baidu Ventures (China) was the most active Utilities Textiles Forestry Software Insurance IT Services Agriculture corporate VC investor in AI startups in 2018. Other Energy Transportation Other Materials Energy Services Semiconductors Other Healthcare Energy Equipment Commercial Banks Consumer Durables Computer Hardware Healthcare Services Commercial Services Commercial Products Chemicals and Gases

Other Financial Services Consumer Non-Durables Services (Non-Financial) Apparel and Accessories Containers and Packaging Commercial Transportation Capital Markets/Institutions Metals, Minerals and Mining Other Information Technology Restaurants, Hotels and Leisure Healthcare Devices and Supplies Healthcare Technology Systems Communications and Networking

Exploration, Production and Reﬁning Pharmaceuticals and Biotechnology

Other Business Products and Services Other Consumer Products and Services

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Netherlands-based Startups & Corporate VC Investors

(Netherlands only)

FinTech 7% The Netherlands HealthTech Manufacturing Biotech & Pharma 13% 10 percent of Netherlands-based startups that received private 9% 7% Software venture capital funding, also received corporate VC funding in 2018. 50 percent of the corporate VC funding that NL-based Software 13% startups received in 2018 came from corporate VCs outside the 5% Netherlands in. 4,100 NL-based Other 517 Investments Digital Healthcare Made 20 NL-based 8% NL-based corporate VCs made a median investment size of Startups in 2018 32 % Corporate VCs €4.65M in 2018, with 85 percent of all transactions made in (Industries) early-stage capital fundraising rounds (i.e., Series A to Series B). (All Years) 78 percent of NL-based corporate VCs investments were made Manufacturing 8% in startups based outside The Netherlands. Networks & Cybersecurity Between 2010 and 2018, the number of NL-based corporate Food & Nutrition 7 % VCs more than doubled from 8 to 19. In 2018 alone, NL-based Other 5 % 72 % FinTech corporate VCs made 19 percent of the total investment deals New Energies 7 % since their existence (98 out of 517 investments). 7 %

Recommended Reading: Casey, M., Witteveen, D., Lufting, E., Nijs, J., Bax, M., & Beers, N. (2019). The next chapter for Corporate Venture Capital: "Future-proof" the Netherlands (pp. 1-32, Rep.). Netherlands: Deloitte.

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Engaged Corporate VC Investors ≳20 Investments Past 5 Years (166 ordered)

GV CyberAgent Ventures Liberty Global Ventures ORIX Growth Capital McKesson Ventures MDC Ventures Lenovo Capital and Schibsted Growth Intel Capital Next47 BP Ventures YJ Capital BASF Venture Capital VTT Ventures Incubator Group SAIC Capital Salesforce Ventures Verizon Ventures CAA Ventures Western Digital Capital UTA Ventures Workday Ventures Gelt Venture Capital Munich Re/HSB Ventures Qualcomm Ventures Baidu Ventures Amazon Alexa Fund SIDBI Venture Capital Capital One Growth ENGIE New Ventures Applied Ventures Stanley Ventures Comcast Ventures Upslope Ventures Roche Venture Fund DSM Venturing Ventures Monsanto Growth Ventures Astellas Venture Mandiri Capital Indonesia Eight Roads SB China Venture Capital Tengelmann Ventures ITOCHU Technology Sanofi-Genzyme Hewlett Packard Pathfinder Management MAIF Avenir GE Ventures Bertelsmann Digital Media Legend Star Ventures Bioventures Motorola Solutions Venture SGInnovate Chevron Technology Bloomberg Beta Investments WuXi Healthcare Ventures MassMutual Ventures Sabadell Venture Capital Capital Allianz X Ventures Novo Holdings Pfizer Ventures Merck Ventures WarnerMedia Investments Naspers Ventures Air Liquide Venture Capital Providence Ventures Toyota AI Ventures Samsung Venture CapitalG BlueCross BlueShield Samsung Catalyst Sony Innovation Fund Transamerica Ventures InMotion Ventures Mumbai Angels Investment SR One Venture Partners Airbus Ventures NVIDIA GPU Ventures You & Mr Jones Brandtech Luma Launch Fenox Venture Capital Cisco Investments GREE Ventures BMW i Ventures CEA Investissement Fox Ventures Ventures TELUS Ventures Cowin Capital Legend Capital Robert Bosch Venture Tencent Industry Win-Win Total Energy Ventures Takeda Ventures JetBlue Technology Vorwerk Ventures Clearstone Venture Partners SoftBank Capital Capital Fund Merck Global Health Presidio Ventures Ventures E.ON Strategic Co- Arcapita Alexandria Venture Telstra Ventures Unilever Ventures Innovation Fund Lundbeckfond Ventures Arzan Venture Capital Investments NGP Capital Investments Rakuten Capital KDDI Ventures Program Dentsu Innovation Partners CME Ventures Lilly Ventures Bonsai Venture Capital Gobi Ventures HV Holtzbrinck Ventures American Family Ventures Shea Ventures AbbVie Ventures MDI Ventures GM Ventures Bouygues Telecom ESSEC Ventures Johnson & Johnson Citi Ventures Innovationsstarter USAA Ventures Amgen Ventures Spark Impact Initiatives Oxford Capital Partners Innovation - JJDC Recruit Strategic Partners Partners HealthCare Kaiser Permanente Sky Startup Investments & Equinor Technology Kinzon Capital Maj Invest Equity Dell Technologies Capital Bertelsmann Asia Innovation Ventures Partnerships Ventures 31Ventures Inifinity Group SoftBank Ventures Asia Investments Mayo Clinic Ventures Alibaba Capital Partners Orange Digital Ventures Kickstart Ventures Burda Principal Investments ITOCHU Technology Caixa Capital Risc NTT Docomo Ventures Unitus Ventures Breed Reply Access Technology Constellation Technology Boeing HorizonX Ventures M12 Raine Ventures Clocktower Technology Saudi Aramco Energy Ventures Ventures ConsenSys Ventures KfW IPEX-Bank Desjardins Capital Singtel Innov8 Ventures Ventures Santander InnoVentures Dentsu Ventures UPS Strategic Enterprise Green Pine Capital Partners Deutsche Telekom Capital American Express Ventures SevenVentures Boehringer Ingelheim Broadway Video Ventures Wipro Ventures Fund WestBridge Capital Partners Swisscom Ventures DBJ Capital Venture Fund Syngenta Ventures ABB Technology Ventures Evonik Venture Capital Franklin Templeton Novartis Venture Fund Shell Ventures ZX Ventures Alibaba Entrepreneurs Fund WS Investments PortfoLion Investments

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United States 51 % 51 percent of Engaged Corporate VCs are based in the USA Other Countries 12 %

Exponential Rise of Asia-based Corporate VCs and Asia-based Startups Since 2013 Switzerland 2 % Baidu Ventures, for example, is the 27th most active corporate VC over the past 5 years, but the 4th most active corporate VC in 2018. Spain 2 % In fact, 6 out of the 10 most active corporate VCs in 2018 are based in Singapore Asia. China-based corporate VCs invested between $10.8B in 2018 (~20 2 % percent of total capital invested by corporate VCs) and $50B depending on the data source, and Asia-based startups received between 21-38 Netherlands 2 % percent of all corporate VC deals, depending on the data source Germany examined. France 8 % 4 % China Japan 5 % 7 % United Kingdom 5 %

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Engaged Corporate VC Investors ≳20 Investments Past 5 Years (166 ordered)

Investments by Corporate VCs are Precious Investments by Corporate VCs are Precious

Out of the 166 Engaged Intel Out of the 166 Engaged Intel Corporate VCs, 23 percent Corporate VCs, 9 percent of have made ≳100 corporate VCs made ≳100 GV investments in portfolio investments in portfolio ) startups, while 52 percent ) startups over the past 5 of corporate VC investors years. 27 percent of have made between 0 and corporate VCs made ≳50 60 investments during their All Years investments in portfolio Years 5 Past entire existence. startups, while 58 percent of corporate VC investors made between 0 and 35

Deal Count ( GV <60 Investments <35 Investments

investments over the past 5 Deal Count ( 52% years. 58%

Number of Engaged Corporate VC Investors Number of Engaged Corporate VC Investors

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Engaged Corporate VC Investors 2014 -2018

≳20 Investments Past 5 Years

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1968 Sharp Rise in Young, 2018 1969 1973 2017 1978 Powerful Corporate 2016 2014-2018 VC Entrants 2015 1985 2014 1986

2013 1991 Out of the 166 Engaged Corporate VCs, 65 percent of corporate VCs were founded Engagedof CorporateNumber VC Investors after 2011. Only 20 percent of these 2012 1993 corporate VCs were founded in the year 2000 or earlier.

20 Investments Past 5 Years Years 5 Past 20Investments 2011 1995 ≳

2010 1996

2009 1997

166 2008 13 1998 Engaged Avg. Age CVCS 2007 1999 1915 1969 1973 1979 1985 1991 1997 2000 2007 2011 2015 2018 2006 2000 Corporate VC Year Founded (Engaged Corporate VCs Only) 2004 2003 2001 2002 Engaged Corporate VC Investors Investors Corporate Engaged VC

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Prior Corporate VC Experience Does Not Predict Subsequent 2014-2018 Investment Intensity 500

Based on our regression analysis of 136 By implementing organizational Engaged Corporate VCs (outliers mechanisms, for example, that ensure a removed), we observe that many steady stream of investment funding and recently-founded corporate VCs seem to autonomous decision-making, even 400 require almost three years to ramp up young corporate VCs can become prolific their investments. in their investments within a short timeframe.

The relationship between corporate VC )

20 Investments Past 5 Years Years 5 Past 20Investments age and subsequent investment levels On the other hand, characteristics that 300

≳ over the past 5 years is positive, but lead to better corporate VC performance extremely weak. Even when the full are already being practiced by the high- sample of 166 Engaged Corporate VCs performing, older corporate VC units. Past 5 Years 5 Past are considered, the 10 highest levels of investments in external startups were Therefore, what affects corporate VC 200 made by corporate VCs founded at performance is more a question of different moments in time between 1991 organizing corporate VC activities and 2013. As no particular pattern adaptively, and less a matter of what Deal Count ( emerges, it suggests that the age of a typically accompanies corporate VC corporate VC alone does not help us experience such as established routines 100 predict investment intensity, per se. and familiar social capital networks. Alternatively, different mechanisms may On the one hand, a possible explanation be at play in fresh, versus established for the observed behavior is that some corporate VCs. recently-founded corporate VCs may Engaged Corporate VC Investors Investors Corporate Engaged VC have learned vicariously from observing 0 5 10 15 20 25 30 previous corporate VCs. Corporate VC Age (outliers removed n=136; Age 1-34 coverage)

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Exits by Corporate VCs are Precious Out of the 166 Engaged Corporate VCs, 18 percent have experienced ≳60 exits of portfolio startups, while 57 percent of corporate VC investors have

2014-2018 experienced between 0 and 20 exits during their entire existence. 20 Investments Past 5 Years Years 5 Past 20Investments ≳

Number of Engaged Corporate VC Investors VC NumberCorporate of Engaged SoftBank & Next47 GV Intel Cisco Invt.

0 15 30 45 60 75 90 105 120 135 150 165 180 195 210 795 810 Engaged Corporate VC Investors Investors Corporate Engaged VC Portfolio Startup Exits (All Years)

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Engaged Corporate VC Investors ≳20 Investments Past 5 Years

2014-2018 Volume of Bets as a Performance Strategy Limits to “More Bets” as a Performance Strategy

900 225 GV (207 exits)

800 200 Intel (803 exits) Next47 (176 exits) 700 175

600 150

500 125

400 100 20 Investments Past 5 Years Years 5 Past 20Investments

≳ 300 75

200 50 Portfolio Startup Exits (All Years) Exits (All Startup Portfolio Years) Exits (All Startup Portfolio

100 25

0 0

200 400 600 800 1000 1200 1600 1800 2000 100 200 300 400 500 600 700 800 900 1000

Deal Count (All Years) Deal Count (All Years) (n=166 Engaged CVC Investors) (n=165 Engaged CVC Investors; Intel dropped)

Based on the 166 Engaged Corporate VCs, it first appears that the regressive relationship between deal count and the However, when we drop the Intel corporate VC datapoint from our regression analysis, the relationship between deal number of subsequent portfolio startup exits a corporate VC experiences, is linear and positive. The intuition is that to count and the number of subsequent portfolio startup exits, appears to weaken after some point. The insight is that the Engaged Corporate VC Investors Investors Corporate Engaged VC experience more portfolio startup exits, corporate VCs must place more ‘bets’ in uncertain, innovative external startups. strategy of placing more bets works only up to a point, so that corporate VCs may increasingly have to focus on effectively delivering value-adding services to foster requisite growth in their portfolio startups.

NB: Next47 deal and exit counts include legacy investments from SIEMENS Venture Capital. GV encapsulates five distinct corporate VC units.

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900 Map of Corporate VCs 800

700

The relative size of each circle indicates the age of an 600 Engaged Corporate VC, where a smaller circle represents a more recent founding date and a larger 500

20 Investments Past 5 Years Years 5 Past 20Investments circle represents an older founding date. ≳ These corporate VCs are plotted according to deal 400 count over the past five years and the number of portfolio startup exits since the founding of a 300 19 10 corporate VC. Qualcomm Ventures GV* PortfolioStartup Years) (All Exits * Next47 and M12 deal and exit counts include legacy investments from 200 SIEMENS Venture Capital and Microsoft Ventures, respectively. 10 However, we use the recent founding dates for Next47 and M12, not the historic ones for previous structures. Please note that GV encapsulates Salesforce Ventures five distinct corporate VC units. 100

0 50 100 150 200 250 300 350 400 450 Engaged Corporate VC Investors Investors Corporate Engaged VC

Deal Count Past 5 Years (n=166)

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Corporate VCs are Heterogeneous

2014-2018 The figure illustrates the extent to which active corporate VCs vary greatly in terms of deal counts over the past five years, portfolio startup exits, and age (experience). While holding any of these variables at a constant value, we still see a wide range of values across the other variables. For example, if we hold deal count and age (relatively) constant, there remains variance between Cisco Investments and Samsung Ventures in terms of portfolio startup exists. Similarly, if we hold portfolio startup exists and age (relatively) 200 24 SoftBank Capital constant, there exists variance between Samsung Ventures and Comcast Ventures in terms of recent deal counts. 178 Next47* 26 Cisco Investments 20 19 Qualcomm Ventures 156 This variance is interesting for researchers and practitioners, because Motorola it suggests that there are multiple compositions to achieving high Solutions Ventures 20 Novo 46 20 Investments Past 5 Years Years 5 Past 20Investments 133 performing corporate VCs and that performance along any J&J ≳ dimension is normally distributed (i.e., bell shape). In other words, there may be a complex, interactive set of requisite conditions and 111 21 Comcast Ventures achieving any of these “successful” compositions certainly requires 22 20 Samsung Ventures 10 Salesforce Ventures hard work and a bit of serendipity. 89 Deutsche Telekom

67 Map of Corporate VCs 22 Pﬁzer Ventures 6 GE Ventures 44

The relative size of each circle indicates the age of an Engaged PortfolioStartup Years) (All Exits Corporate VC. These corporate VCs are plotted according to deal 6 Bloomberg Beta count over the past five years and the number of portfolio startup 22 exits since the founding of a corporate VC. M12* 0 * Next47 and M12 deal and exit counts include legacy investments from SIEMENS Venture Capital and Microsoft Ventures, respectively. 0 33 67 Engaged Corporate VC Investors Investors Corporate Engaged VC However, we use the recent founding dates for Next47 and M12, not 100 133 167 200 233 267 300 the historic ones for previous structures. Please note that GV encapsulates five distinct corporate VC units. Deal Count Past 5 Years (n=164; GV and Intel dropped)

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Accelerator Investors (All) 2000-2018 (Years Aggregated)

Deal Count Country Deal Count Region Deal Count Industry Deal Count Type

USA France USA Software Early Stage 42,4% 6,2% 42,4% 47,8% Commercial Services 62,8% Canada 9,7% 6,1% Healthcare Devices UK Europe 4,3% Later Stage 5,7% 33,7% Consumer Durables 15,0% India Other 4,0% Other 3,5% 10,2% Media Other Other 29,0% Asia 3,7% Sweden Canada 7,6% 23,2% 22,2% 3% 6,1% Commercial Products Germany 3,6% 3% Biotechnology Spain 3,2% 2% Transportation Israel 0,5% 2% Italy 2% Netherlands 1% SUMMIT@RSM

Accelerator Investors (All) 2000-2018 (Years Aggregated)

Capital Invested Capital Invested Region Capital Invested Industry Capital Invested Type

USA USA Biotechnology 66,4% Software Early Stage 66,4% 8,0% 44,7% 45,3% Other Commercial Services 11,5% 7,5% Transportation UK 5,4% 4,8% Europe 17,2% Healthcare Devices 5,2% Other Germany Other Asia Other Later Stage 14,0% 3,1% 6,5% 10,1% 29,6% 43,8% Indonesia 2,8% China 2,5% France 2% Canada 2% Israel 2% India SUMMIT@RSM 1%

Startupbootcamp, Seedcamp , Entrepreneur First, EIT Climate-KIC (London) Accelerace (Copenhagen) Foundation for Internet Development-Initiatives Rockstart (Amsterdam) (Moscow) Paris&Co., Numa (Paris) Microsoft ScaleUp (Seattle) MassChallenge (Boston) Wayra (Madrid) Venture Kick (Schlieren) Techstars (Boulder) DreamIt Ventures, Y Combinator, 500 Startups, Alchemist, Google German Accelerator (NYC) Developers Launchpad, Founder Institute, Boost VC, Village Capital (D.C.) SkyDeck, C100 Association (Silicon Valley)

JLABS (San Diego) Capital Factory (Austin), TMC Innovation (Houston)

FasterCapital (Dubai) 93 63—1,560 Parallel18 (San Juan) Top Global Investments Acceleratos (2014-2018) Top 93 Accelerator Investors Past 5 Years (2014-2018) 65—2,432 10-557 Investments Portfolio Startup Exits (All Years) (All Years)

Start-Up Chile (Santiago)

NXTP Labs (Buenos Aires)

NB: Each circle on the map indicates the location of a Top Accelerator’s HQ . The size of the circle denotes the number of investments made in external startups.

We highlight in yellow the top 30 accelerators in the world. Data on China is unreliable and is not shown.

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Top 93 Accelerator Investors ≳63 Investments Past 5 Years (2014-2018)

Accelerators Exhibit Eﬃciency Gains Limits to “More Bets” as a Performance Strategy

225 Start-Up Chile 1800 Microsoft ScaleUp 500 Startups Wayra 200 1600

175

) 1400 MassChallenge 150 1200 125 Techstars Startupbootcamp 1000

Past 5 Years 5 Past 100

800 75 MassChallenge 600

Portfolio Startup Exits Startup Portfolio 50 Deal Count ( Count Deal 400 25

200

0 100 200 300 400 500 600 700 800 900 0 200 400 600 800 1000 1200

Prior Deal Count (Before 2014) Deal Count (All Years) (n=93 Top Accelerator Investors) (n=90 Top Accelerator Investors; 3 outliers removed)

Based on a regression analysis of the 93 Top Accelerators, the relationship between the number of total investments an Based on a regression analysis of the 90 Top Accelerators (the 3 outliers removed were 500 Startups, Y accelerator has made before 2014 and its number of subsequent investments in portfolio startup exits in the past five Combinator, and Techstars), the relationship between the number of total investments made by accelerators and years, is on average non-linear and positive. the number of portfolio startup exits, becomes curvilinear (inverted U-shaped). This pattern is similar to what we found for corporate VC investors in the previous section. The insight is that accelerators’ continuous adaptation improves efficiency and increases the number of cohort startup programs year-to-year. However, the age of an accelerator investor does not appear to be an important determinant of There may be a limit to the number of portfolio startup exits that most accelerator investors can expect to achieve, future investments or future exit performance, ceteris paribus. even if more bets in uncertain startups are taken. Since there is considerable variance in the number of portfolio startup exits at almost any level of accelerator investor investment activity, this pattern might reflect differences in quality among even the most active accelerator investors, in terms of attracting high-quality startups and/or providing effective value-adding services to assist portfolio startups in their growth.

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(Our Preliminary Results)

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Startups’ HQ & High-Tech Industry

High-Tech Industries (ordered)

MedTech Advanced Materials Mobility HealthTech Asset Management Power & RF Switching Software Chemical Power Electronics Artiﬁcial Intelligence CleanTech PropTech Biotechnology Design Engineering Semiconductors FinTech Services Smart Materials EduTech E-commerce Telecom e-commerce IoT Enterprise Software Telecommunications Robotics Hospitality Travel e-commerce 3D Printers IIoT Service Provider Virtual Reality Additive Manufacturing IT NB: Each circle on the map indicates the location of a participating startup’s HQ

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Startups’ Age & Business Stage

Startup Age Startups’ Business Stage (2018 Global Startup Fundraising Survey)

3yrs mean (Survey First Wave)

6yrs mean (Survey Second Wave) Product Development 23 % Revenue 57 %

Early Stage 9 %

Proﬁtable 9 % Exited 0 13 2 %

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Startups’ Drivers Acquisition & Exit Strategies 34,6 %

Startups’ Preferred Exit Strategy (2018 Global Startup Fundraising Survey)

Remain Independent 28,8 % TOP SOURCES OF COMPETITIVE ADVANTAGE (ordered: Highest to Least) • Novel technologies • Unique positioning in niche markets • Establishment of new markets Superior product or service qualities • IPO 9,6 % TOP MOTIVATIONS FOR RAISING CAPITAL (ordered: Highest to Least)

• Product development • Sustain current operations No Preference • Increase sales with current product or service 26,9 % • Internationalization efforts

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All Rights Reserved. Copyright © 2019. Created by Joshua Eckblad, Academic Researcher at TiSEM in The Netherlands. dimension well-suited to a givenbe particularly considered those investor classes to onaverage,surveyed startups, NB: Capital of Smart Perceptions Startups’ Each yellow circle indicates that Corporate/PrivateAccelerators Friends, Family, and Fools and Family, Friends, All RightsReserved. Copyright ©2019. Created by Joshua Eckblad, Academic Researcher at TiSEM in The Netherlands. Business Angels Angels Business Corporate VCs Crowdfunding PrivateVCs SUMMIT@RSM

Strong financial support 47

Fair equity deal

No board representation

Strong reputational signal

Strong manufacturing support

Investor as first customer

Strong Sales & Marketing support

Strong IPO network

Strong R&D support

Strong HR support

Geographic proximity

Cultural proximity

Strong commitment ties

Strong interpersonal ties

Similar prior experience

Extensive industry expertise

Compatible exit preference

Strong management control 48

Corporate—Startup Engagement

Unrealized Potential Startups’ Engagement With Corporates (2018 Global Startup Fundraising Survey)

15 percent of all startups surveyed obtained more than two types of engagements to corporate ﬁrms (multiplex corporate-startup relationships). Of those startups that received investments from corporate VCs, they perceived corporate VCs’ focus as being close to the middle on the ‘Financial—Strategic’ continuum. Engaged with a Corporate Firm 58,5 %

12 10 8 7 5 4

No Engagement Spin-off Vendor ID License-In 41,5 % License-Out Corporate VC Commercial Ties

Corporate Accelerator

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Investor Delivers 1,75 Reputational Signal 1,5 1,25

Corporate VCs Deliver 0,75 on Reputational Signal 0,5

0,25

0 According to our survey, startup co-founders stated -0,25 that receiving an enhanced “reputational signal” from investors matters to them. -0,5

These co-founders perceive corporate VC and -0,75 private VC investor classes as offering the strongest “reputational signal” among competing -1 investor classes. -1,25 For those startups that received corporate VC funds, corporate VCs were evaluated by startup co- -1,5 founders as having most succesfully delivered on the “reputational signal” dimension out of all -1,75 measured dimensions. -2 Fair equity HR support IPO network R&D support First customer Prior experience Financial support Interpersonal ties Interpersonal Commitment ties Commitment

How Much This Dimension Matters to Startups (Survey 1) proximity Cultural Industry expertise Strategic advisory Strategic Sales & Marketing Sales Reputational signal

How Much This Dimension Matters to Startups (Survey 2) supportOperational Management control Management Geographic proximity Geographic Manufacturing supportManufacturing No board representation No board Strategic alliance partners alliance Strategic Compatible exit preference exit Compatible

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Investor As 1,75 First Customer 1,5 1,25

0,75 Corporate VCs Did Not Become Startups’ First Customer 0,5

0,25

According to our survey, startup co-founders stated -0,25 that having an investor become their “first customer” matters to them. -0,5

These co-founders perceive the corporate VC -0,75 investor class as possessing the strongest likelihood of becoming the startup's “first customer” -1 among competing investor classes. -1,25 For those startups that received corporate VC funds, corporate VCs were evaluated by startup co- -1,5 founders as having under-delivered on the “first customer” dimension. -1,75

-2 Fair equity HR support IPO network R&D support First customer Prior experience Financial support Interpersonal ties Interpersonal Commitment ties Commitment How Much This Dimension Matters to Startups (Survey 1) proximity Cultural Industry expertise Strategic advisory Strategic Sales & Marketing Sales Reputational signal

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Investor Support in 1,75 Sales & Marketing 1,5 1,25

0,75 Corporate VCs Offered Inadequate Support in Sales & Marketing Activities 0,5

0,25

According to our survey, startup co-founders stated -0,25 that receiving “sales & marketing support” from investors matters to them. -0,5

These co-founders perceive the corporate VC -0,75 investor class as possessing the strongest “sales & marketing support” among competing investor -1 classes. -1,25 For those startups that received corporate VC funds, corporate VCs were evaluated by startup co- -1,5 founders as having under-delivered on the “sales & marketing support” dimension. -1,75

-2 Fair equity HR support IPO network R&D support First customer Prior experience Financial support Interpersonal ties Interpersonal Commitment ties Commitment Cultural proximity Cultural Industry expertise Strategic advisory Strategic How Much This Dimension Matters to Startups (Survey 1) & Marketing Sales Reputational signal Operational supportOperational

How Much This Dimension Matters to Startups (Survey 2) control Management Geographic proximity Geographic Manufacturing supportManufacturing No board representation No board Strategic alliance partners alliance Strategic Compatible exit preference exit Compatible

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Investor Support 1,75 in R&D 1,5 1,25

0,75 Corporate VCs Offered Inadequate Support in R&D Activities 0,5

0,25

According to our survey, startup co-founders stated -0,25 that receiving “R&D support” from investors matters to them. -0,5

These co-founders perceive the corporate VC -0,75 investor class as possessing the strongest likelihood of providing “R&D support” among -1 competing investor classes. -1,25 For those startups that received corporate VC funds, corporate VCs were evaluated by startup co- -1,5 founders as having severely under-delivered on the “R&D support” dimension. -1,75

How Much This Dimension Matters to Startups (Survey 1) supportOperational Management control Management How Much This Dimension Matters to Startups (Survey 2) proximity Geographic Manufacturing supportManufacturing No board representation No board Strategic alliance partners alliance Strategic Compatible exit preference exit Compatible

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Investor Support 1,75 in HR 1,5 1,25

0,75 Corporate VCs Offered Inadequate Support in HR Support 0,5

0,25

According to our survey, startup co-founders stated -0,25 that receiving “HR support” from investors matters to them. -0,5

These co-founders perceive the private VC and -0,75 corporate VC investor classes as providing the strongest “HR support” among competing investor -1 classes. -1,25 For those startups that received corporate VC funds, corporate VCs were evaluated by startup co- -1,5 founders as having severely under-delivered on the “HR support” dimension. -1,75

How Much This Dimension Matters to Startups (Survey 1) Reputational signal Operational supportOperational Management control Management How Much This Dimension Matters to Startups (Survey 2) proximity Geographic Manufacturing supportManufacturing No board representation No board Strategic alliance partners alliance Strategic Compatible exit preference exit Compatible

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Investor Offers 1,75 Strategic Advice 1,5 1,25

Corporate VCs Offered Little to No 0,75 Strategic Advice 0,5

0,25

0 According to our survey, startup co-founders stated -0,25 that receiving “strategic advice” from investors matters to them. Based on further interviews with -0,5 startups, this dimension was added to the second wave of the Global Startup Fundraising Survey. -0,75

These co-founders perceive the private VC and -1 corporate VC investor classes as possibly offering the strongest “strategic advice” among competing -1,25 investor classes. -1,5 For those startups that received corporate VC funds, corporate VCs were evaluated by startup co- -1,75 founders as having under-delivered on the “strategic advice” dimension. -2 Fair equity Fair HR support IPO network R&D support First customer First Prior experience Prior Financial support Financial Commitment ties Commitment Interpersonal ties Strategic advisory Strategic Industry expertise Cultural proximity Cultural Sales & Marketing Reputational signal Reputational Operational support Operational Management control Geographic proximity Geographic Manufacturing support

How Much This Dimension Matters to Startups (Survey 1) representation No board Strategic alliance partners Strategic

How Much This Dimension Matters to Startups (Survey 2) preference exit Compatible

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Engagement Criteria & Success Factors

Selection Criteria used by Success factors for working Communication modes between Startups to evaluate corporate VCs with corporate VCs startups & Corporate VCs

(ordered: Highest to Least) (ordered: Highest to Least) (ordered: Highest to Least)

• Strategic ﬁt • Strategic ﬁt • Annual board meetings • Deal terms • Relational compatibility • Scheduled calls or meetings • Relational compatibility Interaction between the Startup and • Informal contact • Emails Corporate VC’s portfolio historical • • Corporate business units • Community/network events performance • Constructive relationship between • Industry expertise the corporate VC and its corporate NB: Communication frequency is typically monthly • Value-adding services parent (similar to private VCs) • Corporate VC decision-making • Representation of the corporate speed parent on the Startup’s board (exists • Corporate VC reputation for fair in 26.3 percent of the cases; in treatment of startups 77.7% of the cases, the CVC sits on • Compatible exit strategy the startup’s board in some • Operational support capacity) • Geographic proximity • Operational support to the startup • Speed of the corporate VC team

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Please Distribute

Please communicate our 2019 survey to your portfolio companies !

https://www.corporateventuringresearch.org/2019- global-startup-fundraising-survey

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All Rights Reserved. Copyright © 2019. Created by Joshua Eckblad, Academic Researcher at TiSEM in The Netherlands. Get Involved in Evidence-based Research (Startups, Corporates, & Private Intermediaries)

https://www.corporateventuringresearch.org/

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