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CVC Strategy: Lessons from 2020, Strategic Considerations for 2021 CVC Strategy: Lessons from 2020, Strategic Considerations for 2021 1 Working with DLA Piper at a glance • Working with DLA Piper’s Corporate Venture group brings several benefits to our clients: • Capacity: Corporate venture capital deals frequently involve short deadlines – due to the large number of partners and associates who routinely work on transactions, we can ensure that the necessary resources are available for our clients • Integrated Approach with full scope of legal disciplines to support transactions: Our success in supporting clients in corporate venture capital transactions is underpinned by market leading tax, intellectual property and technology, labor and employment, data privacy and security, and regulatory specialists who are deployed when their expertise is required • Large international network: DLA Piper is one of the few international legal service providers with access to a large international network of corporate venture capital legal advisors and the support of 4,300+ lawyers in more than 90 offices in over 40 countries • Local contacts: Instead of coordinating with different legal advisors, our clients will have a bi-coastal team of US- based corporate venture capital partners as responsible contacts who will coordinate a transaction project on a national or international level which saves time and brings efficiency to the process • Expertise: Our lawyers have extensive know how executing complex corporate venture capital transactions and can bring the experience of many projects and transactions with them • DLA has the leading corporate venture practice, Global Corporate Venturing • DLA ranked #1 Global M&A deal volume in 2020 for the eleventh consecutive year, Mergermarket www.dlapiper.com 2 Corporate Venture Recognition • In the past three years, completed over 2100 deals, totaling over US$31 billion • Twice named the "Legal Firm of the Year“ (Global Corporate • We advise investors and companies on 800+ venture and debt financings Venturing) annually and have deep experience working with corporate venture funds on • The only law firm to rank in the investments, commercial agreements, acquisitions and disposals top five for M&A, Private Equity and Venture Capital (PitchBook) • We are active in global markets on behalf of our clients every day and routinely execute a large volume of complex venture transactions, • #1 law firm advisor to investors allowing us to provide clients with: (PitchBook) • Efficient, cost-effective service regardless of the size of the deal • Recognized – Nationwide: • A highly integrated and skilled team, from senior partners to Startups & Emerging Companies (Chambers USA 2019) experienced associates, who are conversant in a variety of legal disciplines • Recognized as the 2nd global elite law firm brand in the Acritas US • Thought leadership and training on structures, trends and best practices Law Firm Brand Index 2020 in corporate venture • Relationships and insight by leveraging the collective knowledge and contacts of DLA Piper’s lawyers in offices throughout the world www.dlapiper.com 3 Representative Corporate Venture Clients www.dlapiper.com 4 Representative Corporate Venture Transactions Series C investment Series 6 financing of Series A-3 and Series Series B financing of Series B investment in Limelight Health Proterra, Inc. A-4 financings of Serviz, Inc. in Helium Systems, CollabIP, Inc. (dba Inc. Tethr) Series E investment $18 million Series B Series A financing of Series A Preferred Series B financing of in DocuSign investment into Suja Life, LLC Stock financing of ARC Holdings Skyera, Inc. Keemotion, Inc. Series A financing of Series E Preferred Series C Preferred Financing of Libre Series E financing of Stanson Health, Inc. Stock financing of Stock financing of Wireless Guardant Health BORQS Ltd. Matterport, Inc. Technologies, Inc. www.dlapiper.com 5 Corporate Venture: One Tool in the Innovation Tool Kit • Corporate venture capital • Investment/engagement with accelerators and other startup programs • Collaboration with other corporations • Open source software foundations: OpenStack Foundation/OpenMAMA • Industry collaborations • Internal projects/entrepreneurship • Internal projects for internal use • Process for spinning out “on the shelf” technologies • Use startup methodologies such as “lean startup” (adopted by GE) • M&A • Digital transition to integrate new technologies more swiftly www.dlapiper.com 6 Corporate Venture: Strategic Alliances to Serve Innovation Needs of Corporations Innovation M&A M&A Corporate Venture Capital Incubation Commercial Piloting Corporate R&D Venturing Innovation Integrated Innovation Center of Excellence Corporate Innovation Innovation Partnering Incubation, Commercial Piloting JV and Strategic Licensing Alliances www.dlapiper.com 7 Why do Corporate Venturing? Create a channel to stay current on Optimize your current business by Drive your company into adjacent and emerging trends and technologies – leveraging the speed, agility, and new markers using a portfolio staying up to speed on the “art of the possible.” innovations of startups. approach by placing a series of small bets. www.dlapiper.com 8 Options for Corporate Venturing. Design, launch, and manage world-class CVC Funds leveraging the experience, deal flow, global network, and success of our top-tier Silicon Valley VCs. Support Executive Investment Committees without a CVC, who are investing off the balance sheet — bringing the discipline, portfolio mindset, metrics, and best practices needed to drive meaningful growth. Adopt best-in-class methods for partnering with and leveraging external startups to drive maximum value and innovation across the core business. www.dlapiper.com 9 2020 in Context “There has been more innovation in the last six months than in the last six years” Mohanbir Sawhney, professor at the Kellogg School of Management at Northwestern University www.dlapiper.com 10 2020 Trends • Remote working • Rethinking workforce management • Move to the cloud • New business models • Telehealth • eLearning • DeFi www.dlapiper.com 11 Global Venture Capital Transactions www.dlapiper.com 12 Global CVC Transactions www.dlapiper.com 13 Global VC Transactions by Industry www.dlapiper.com 14 Global CVC Transactions by Industry $160.00B $140.00B $120.00B $100.00B Materials and Resources Information Technology $80.00B Healthcare Financial Services $60.00B Energy (B2C) $40.00B (B2B) $20.00B $0.00M 2016 2017 2018 2019 2020 2021 Source: PitchBook Data, Inc. www.dlapiper.com 15 Global Venture Capital Transactions by Round www.dlapiper.com 16 Global CVC Transactions by Round 100% Angel 90% 19th Round 80% 16th Round 15th Round 70% 14th Round 60% 13th Round 12th Round 50% 11th Round 40% 10th Round 30% 9th Round 8th Round 20% 7th Round 10% 6th Round 5th Round 0% 2016 2017 2018 2019 2020 2021 4th Round 3rd Round Source: PitchBook Data, Inc. www.dlapiper.com 17 2021 Technology Trends (Gartner) • Internet of Behaviors • Total Experience • Privacy Enhancing Computation • Distributed Cloud • Anywhere Operations • Cybersecurity Mesh • Intelligent Composable Business • AI Engineering • Hyperautomation www.dlapiper.com 18 The key is to create actionable objectives. DEVELOP A Drive growth with fast access to PORTFOLIO AND innovation. Be credible towards startups and top VCs / CVCs PIPELINE OF NEW VENTURES SCALE LEARNING Develop a sensor network to stay current on ACROSS THE emerging trends and technologies to channel back to the Mothership. MOTHERSHIP DEVELOP SPEED AND Make small bets, fail fast, maximize learning. Not AGILITY judged on individual investment, but portfolio quality. MOVE THE NEEDLE Deliver meaningful financial results, new revenues, startup equity, better-informed M&A www.dlapiper.com 19 Here’s a starting list of what startups and VCs need. Access to Customers Market Knowledge Brand Validation Channel Partners Operating Expertise Last and Least - Capital www.dlapiper.com 20 How your CVC fund will win in 2021 Build Hybrid Team Sense of Network Skillset Location Matters Stability Urgency Build a solid and Combine the skills and While the Silicon Valley Scout a team of Sense of urgency and extensive internal network of a company is the oldest and competent innovation flexibility in decision- innovation veteran with deep knowledge deepest startup and investment making from the network over 2 of company core ecosystem in the world, professionals. investment committee. years to generate competencies, assets, other global innovation deal flow and capabilities, and business with hubs are important to EIRs with deep Silicon Make small bets, fail accelerate a Venture Capital veteran with monitor. Valley connections. fast, maximize learning. startups. Silicon Valley (and / or global ecosystem) networks, insider Senior leader who can access, and deal-making navigate the experience. Mothership, incentivized to slay for the long term. Report to Investment Mothership Product- CxO Commitment Management Reciprocity Market Fit Reporting to CxO Commit to incubate new Good working Learn and adopt the Leverage Silicon Valley will accelerate business models and invest relationships with "pay-it-forward" best practices to deeply your efforts. selectively in startups. individuals throughout approach of working understand customers R&D, CFO, and Not a blind cash pool. Agile the organization: within the ecosystem. and consumers. others as and responsive. brands, marketing, advisors as R&D. Understand the needs Stay relevant and needed 24 to 48-hour decisions on of all of our current on
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