The Emergence of Corporate Venture Capital
Rohin Bhasin, Lead Venture Architect at BCG Digital Ventures, shares his highlights from The Upfront Summit.
With so many venture capitalists and entrepreneurs gathering together for a single event, it wasn’t surprising to hear some impressive new insights on the emergence of corporate venture capital at The Upfront Summit in Los Angeles this past week. In fact, several of my key takeaways from the event came from the corporate venture capital panel, with senior members from Intel Capital, Qualcomm Ventures, Verizon Ventures and other corporate VCs as panelists. Here are three of the highlights I gathered from this breakout session:
- Established businesses and start-ups are joining forces to conquer the innovation sector. This may seem intuitive, but traditional venture capital firms have contributed to the start-up ecosystem for a long time. Now corporations are beginning to take notice of this distinct model of innovation partnerships in a real way. We see it every day at the BCGDV headquarters, as we host four or five Fortune 1000 executive teams each week to discuss innovation, investment and partnership opportunities. They’ve recognized the strategic value of partnering with emerging companies and how “start-ups” that have disrupted incumbent business models can help grow their businesses in new and unexpected ways. As this current widespread innovation boom (coming primarily from well-funded start-ups) continues, and traditional venture funding slows, we’ll likely see even more corporates pursue partnerships or acquisitions.
- The perception of corporate venture capital is changing. For many years, corporate venture capital took a back seat to other forms of organizational transformation, but that’s no longer the case. Many corporates are taking part in the innovation ecosystem and looking to partner with emerging companies and venture capitalists to help them tap into their comparative advantages and explore new growth possibilities. This is beneficial to entrepreneurs, especially as corporates start accepting more risk and contribute to strategic investments in greater numbers. One interesting anecdote that illustrates this point came from a seasoned corporate VC at the conference. He noted that the number of corporate venture arms in attendance at the recent annual Corporate Venture Capital conference (that coincidentally takes place here in Southern California) increased from approximately 125 to over 400 this year.
- Large companies are uniquely positioned to implement disruptive ideas. Truly disruptive “start-up” businesses have access to the ingredients needed to change markets and industries. They usually have the money, experience, customer base and talent, and they’re able to create amazing new products, services and businesses when they leverage their resources. Corporate venture capital firms are on the front lines of this effort, as corporates have tremendous assets already in place and are seeing more interest from upstarts and established companies to partner with.
As someone who helps corporations identify and capitalize on innovation opportunities, this is particularly relevant to my work. Our only mandate moving forward is to realize its relevance on the ground by continuing to build or identify disruptive new ventures.