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Benchmarking Corporate Venture Capital


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Learn about the major trends, biggest investments, and key players in Corporate Venture Capital.

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Benchmarking Corporate Venture Capital

  1. 1. @cbinsights
  2. 2. @cbinsights Webinar recording will be distributed immediately after The presentation will also be sent to you. Feel free to share with colleagues. The resolution of some slides may be suboptimal due to the webinar software. Those slides will look fine in the presentation that we send you. During the webinar, technical help is also available 2
  3. 3. @cbinsights Join the conversation on Twitter Share your favorite insights & data points on Twitter @cbinsights #corpvcdata 3
  4. 4. @cbinsights About Our Presenter – Kerry Wu 4 • Research Analyst, CB Insights • Published research and data analysis has been featured in The New York Times, Financial Times, Bloomberg, and Quartz, among other major media outlets • Previously management consultant with Simon-Kucher & Partners • Graduate of Columbia University with B.S. in Operations Research and Economics
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  7. 7. @cbinsights In God we trust, all others must bring data 7
  8. 8. @cbinsights 8
  9. 9. @cbinsights 9 IN THE NEXT 30-40 MINUTES, WE’LL COVER… 1 The continued rise of corporate venture capital Macro trends in corporate venture capital 3 Where corporate VC is investing Sector-level trends within CVC 4 Benchmarking corporate venture funds Comparing corporate VC funds by focus area 5 Case study: Citi Ventures A deep-dive inside the portfolio and strategy of an active financial servicesventure arm 2 Quantifying corporate VC within venture How does corporate venture capital measure up to the greater VC ecosystem?
  10. 10. @cbinsights THE CONTINUED RISE OF CORPORATE VENTURE CAPITAL Macro trends in corporate venture capital 10
  11. 11. @cbinsights 11 CORPORATE VC TODAY: A THRIVING, DIVERSE ECOSYSTEM “Corporations are embracing innovation in a way like never before… Given that offense is often your best defense, [the rise of] corporate VC is a manifestation of corporations embracing innovation as a means for growth and defense from being marginalized.” - Karen GriffithGryga, Dreamit Ventures “The rise of corporateVCs: what that meansfor theindustry” Steve Loeb, Feb 17 2016
  13. 13. @cbinsights 13 2015 GLOBAL CORPORATE VENTURE ACTIVITY HITS FRESH HIGHS, BUT ENDS ON WEAK NOTE 2015 saw corporate VC investors participate in $28.4B of funding across 1301 deals, topping 2014’s record numbers. However, as overall venture activity slowed in Q4’15, corporates pulled back as well, with deal activity dropping to its lowest level since Q1’14.
  14. 14. @cbinsights 14 CORPORATE VENTURE INVESTMENTS IN EUROPE, ASIA ON THE RISE North American startups took over half of the deals with CVC participation in each of the five quarters analyzed. However, North American deal share steadily dropped throughout 2015, with no. 2 Asia and no. 3 Europe both seeing upticks in deal share.
  15. 15. @cbinsights 15 CVC DEALS RETURN TO THE EARLY-STAGE MARKET Q1’15 represented a 5-quarter low for early-stage (seed/Series A) CVC activity, with deals dropping to 43% while Series D+ rose to 14% of the total. However, by Q4’15 late-stage deals had pulled back to 10% of CVC deals, while early-stage deals rebounded to 50%.
  16. 16. @cbinsights 16 INTERNET SECTOR CONTINUES TO TAKE DOMINATE SHARE OF CVC DEAL ACTIVITY Despite fluctuations in absolute share, the internet sector remained the top recipient of global CVC deals, taking 48% of them in Q4’15. Deal share to mobile & telecom startups topped the share for healthcare in 4 out of the past 5 quarters.
  17. 17. @cbinsights 17
  18. 18. @cbinsights 18 ACTIVE CVCS NEARLY DOUBLE FROM Q3’12 TO Q3’15 A record 185 corporate VC firms completed an investment in Q3’15, representing a 31% year- on-year increase and a jump of 97% from the 94 firms making an investment in Q3’12.
  19. 19. @cbinsights 19 CVC INVESTORS PILE INTO SEED-STAGE INVESTMENTS IN RECORD NUMBERS IN 2015 In 2015, 126 unique CVC arms participated in at least one seed VC round worldwide. That represents a fourfold increase from the 30 corporate VCs who completed such deals in 2011.
  20. 20. @cbinsights 20 2015 ALSO SEES RECORD NUMBER OF NEW CORPORATE VC ARMS 85 new corporate VC units globally made their first in investment in 2015, including notable names such as Twitter Ventures and Workday Ventures. This continues a steadily upward march in new participants since 2010.
  21. 21. @cbinsights 21 THE MOST ACTIVE CORPORATE VENTURE CAPITAL GROUPS Rank CVC Investor Recent* New Investments 1 2 3 4 5 2015 Most Active CVCs (by # of unique global company investments) Intel Capital led all CVCs in global activity, investing in more than 75 companies, roughly 18% more than second-place GV. They have been aggressively investing abroad, with about 32% of their 2015 investments made in companies outside the US. *Includes investments in 2016 YTD
  22. 22. @cbinsights 22 APART FROM CVC ACTIVITY, CORPORATES ARE ALSO INVESTING DIRECTLY IN STARTUPS Beyond dedicated venture arms, corporations themselves are also funneling dollars directly to VC-backed startups. Led in activity by Chinese heavyweights like Tencent and Alibaba, corporates participated in 668 deals that represented $26.9B of funding in 2015*. *Corporate deals without a CVC co-investor (deals with a CVC co-investor are included in the CVC figures).
  23. 23. @cbinsights COUNTRY RECAPS: UK, CHINA, AND INDIA 23
  24. 24. @cbinsights 24 UK SEES FUNDING FROM DEALS INVOLVING CVCs RISE EIGHTFOLD SINCE 2011 CVCs took part in $1.7B of investment across 41 deals to UK-based private companies in 2015, representing a sharp rise from 2011 (22 deals and $203M). Some of the year’s largest deals include July’s $460M Series H to O3B Networks and a $320M financing to Immunocore.
  25. 25. @cbinsights 25 CVC INVESTMENT IN CHINA SEES AN UPSWING ON THE BACK OF MEGADEALS Corporate venture units participated in $6.2B of financings across 66 deals in China, rising from just $910M and 57 deals in 2014. CVCs were prominent in megadeals, including an $850M Series E to Dianping in April and a $2B Series F to Didi Kuaidi in July.
  26. 26. @cbinsights 26
  27. 27. @cbinsights 27 CVC DEALS, DOLLARS IN INDIA DROP FROM 2014 RECORDS CVC activity receded in India in 2015, down from $443M and 29 deals in 2014 to $421M across 24 deals. Q3’15 was a strong quarter, with 10 deals, but funding was driven by a $100M round to home furnisher Pepperfry and a $90M round to doctor search portal Practo.
  28. 28. @cbinsights 28 QUALCOMM, INTEL, BERTELSMANN ACTIVE INVESTORS IN MAJOR MARKETS OUTSIDE US Qualcomm has been actively sourcing investments from outside the US, ranking in the top 5 investors in each of these markets since 2011. Intel was the most active in both China and India, while Bertelsmann’s investment arms also make appearances. Rank CVC Investor 1 2 2 4 4 Most Active CVCs in the UK 2011-2015 Rank CVC Investor 1 Intel Capital 2 3 4 5 Most Active CVCs in China 2011-2015 Rank CVC Investor 1 2 3 3 Most Active CVCs in India 2011-2015 Most active by number of unique company investments.
  29. 29. @cbinsights CORPORATE VENTURE INVESTMENT IN THE US Macro trends in CVC funding to US-based startups 29
  30. 30. @cbinsights 30 US CVC FUNDING HITS RECORDS IN 2015, BUT ALSO SEES SHARP PULLBACK IN ACTIVITY IN Q4’15 Corporate VCs participated in 806 deals representing $17.4B of funding to US-based companies in 2015. Funding dollars rose 33% in the year, but deal growth nearly flat-lined at just 2%. The Q4’15 year-end slowdown saw the fewest CVC-backed deals since Q4’13.
  31. 31. @cbinsights 31 CALIFORNIA TAKES OVER HALF OF US CVC DEALS IN 2015 Aside from a Q1’15 dip to below 50% share, the Golden State continued to dominate US CVC deal activity, securing 51% of US deals with CVC involvement in 2015 overall. New York edged out Massachusetts by a single deal to secure second place for the year.
  32. 32. @cbinsights 32 CORPORATE VENTURE ARMS ACTIVE IN US MID- STAGE MARKET Series B activity only made up 17% of US CVC deals in Q4’14, but grew to 28% in Q4’15. Mid- stage (Series B and C) took a 38% share in that quarter. Apart from a peak in Q3’15, seed/angel activity took under 20% of deals done by CVC arms in the US in 2015.
  33. 33. @cbinsights 33 US CVC DEAL ACTIVITY FOCUSED ON INTERNET; BUT MOBILE & HEALTHCARE CLOSE Among US deals with CVC backing, the internet sector accounted for a 34% share in Q1’15 but grew to 49% by year’s end in Q4’15. Mobile and healthcare traded second place, though healthcare (17.2%) just edged out mobile (16.5%) to place second in share for full-year 2015.
  34. 34. @cbinsights 34 THE MOST ACTIVE CORPORATE VENTURE CAPITAL GROUPS INVESTING IN THE US With a US-centric portfolio, GV traded places with global leader Intel Capital to claim the top spot here. Salesforce also swapped places with Qualcomm Ventures to place third. Rank CVC Investor Rank CVC Investor 1 6 2 7 3 7 4 9 5 10 2015 Most Active CVCs (by # of unique US company investments)
  35. 35. @cbinsights 35
  36. 36. @cbinsights QUANTIFYING CVC WITHIN VC How does corporate venture capital measure up to the greater VC ecosystem? 36
  37. 37. @cbinsights 37 CVCs PARTICIPATE IN A FIFTH OF ALL VC DEALS IN 2015 Corporate venture firms participated in 19.3% of the 6743 venture-backed financing rounds in 2015, compared to a participation rate of just 16.5% in 2013.
  38. 38. @cbinsights 38 CVC DEAL SHARE AT 18% OR HIGHER FOR 7- STRAIGHT QUARTERS On a quarterly basis, CVC deal share topped out at 21% in Q3’15, which was the frothy peak for VC funding overall.
  39. 39. @cbinsights 39 CVC US DEAL SHARE AT 19% OR HIGHER FOR 7- STRAIGHT QUARTERS As with the global view, CVC quarterly deal share in the US topped out at 23% during the rash of Q3’15 fundings.
  40. 40. @cbinsights 40 CVC DEAL SIZES CONTINUE TO OUTPACE VC OVERALL Average deal size with CVC participation has topped $21M+ for 3 consecutive quarters, including a Q3’15 spike bolstered by monster deals to Didi Kuaidi and SoFi (among others).
  41. 41. @cbinsights 41 CVC DEAL SIZES IN US ALSO SUBSTANTIALLY LARGER THAN VC AS A WHOLE The average size of deals with CVC participation was larger than overall US VC deals, mirroring the global pattern. The average size of deals with CVC investors stayed under $16M throughout 2013, but was above $21M in final 3 quarters of 2015.
  42. 42. @cbinsights KLEINER PERKINS, NEA MOST FREQUENTLY CO- INVEST WITH CVCs Since 2011, Kleiner Perkins, NEA, and Andreesen Horowitz have completed the most deals alongside a corporate venture arm. 42 *Rankings shown include Atlas Venture and Accomplice as combined entity
  43. 43. @cbinsights ORBIMED DOES HIGHEST SHARE OF CVC- SYNDICATED DEALS From 2011 to 2015, OrbiMed has done a full 30% of its deals with a corporate venture unit. 14 VCs see at least 20% of their deals completed with a CVC backer. *Rankings shown include Atlas Venture and Accomplice as combined entity 43
  44. 44. @cbinsights 44
  45. 45. @cbinsights 45 WHERE CORPORATE VCS ARE INVESTING Sector-level trends within CVC
  46. 46. @cbinsights 46 CVCs PARTICIPATE IN $12.1B OF FUNDING TO INTERNET SECTOR Corporate VC involvement in the internet sector boomed, as CVCs participated in $12.1B of funding across 578 deals to VC-backed companies in 2015. Dollars retreated sharply in Q4’15 following two outsize quarters, as deal count slipped for the second-consecutive quarter.
  47. 47. @cbinsights 47 ASIA GAINS GREATER SHARE OF CVC INTERNET DEALS Corporate VC deal share in Internet has remained relatively consistent across the top 3 continents. North America still captures the majority of all investments, but Asia accounts for 25% of deals after taking 21% in two of the previous four quarters.
  48. 48. @cbinsights 48 CVCs INVESTING LESS FREQUENTLY IN MOBILE AND TELECOM CVC interest in mobile slid in 2015 with deal count falling for 5-straight quarters, and Q4’15 seeing the fewest CVC-backed mobile deals in over 2 years. Funding to the sector was erratic through 2015, with the Q3’15 spike driven by CVC participation in $1B+ rounds to Didi Kuaidi.
  49. 49. @cbinsights 49 EUROPE HEATING UP FOR CORPORATE VC DEALS IN MOBILE Europe saw quarter-on-quarter growth in its share of CVC deals to mobile and telecom in 4 of the past 5 quarters, taking nearly a fifth of global CVC mobile deals in Q4’15.
  50. 50. @cbinsights 50 HEALTHCARE SECTOR SEES STRONG YEAR IN CVC INVESTMENT Healthcare funding from deals with CVC participation totaled $5.4B in 2015, a 90% increase over 2014. There were 192 deals with CVC participation to healthcare in 2015, compared to 168 in 2014. Funding peaked in Q3’15, but topped $1.1B in every quarter of 2015.
  51. 51. @cbinsights 51 NORTH AMERICA DOMINATES IN HEALTHCARE CVC DEAL SHARE Led by the US, North America took 74% of deals with CVC participation in healthcare overall in 2015. Europe generally took second place, with Asia trailing in third.
  52. 52. @cbinsights 52 BIG PHARMA SOCIAL GRAPH HIGHLIGHTS INTEREST IN ORPHAN DRUGS AND ONCOLOGY Most pharma giants have invested in at least one company developing an orphan drug. Oncology was also a hot area, with 62 of the 289 deals analyzed going to companies working on experimental cancer drugs and therapies. Source:
  53. 53. @cbinsights 53
  54. 54. @cbinsights 54 MAJOR BANKS BETTING ON PAYMENTS AND BIG DATA TECH Banking giants and their venture arms have made multiple fundings into payments and data analytics companies, as well as asset management and peer-to-peer lending startups. Source:
  55. 55. @cbinsights 55 BIG OIL NOT SHYING AWAY FROM PRIVATE INVESTMENTS IN ENERGY AND TECH Oil and gas giants have also embraced investing in private companies innovating in diverse areas including cleantech, wearables, connected fleets, seismic technology, and big data. Chevron Technology Ventures has been especially active, joined by Saudi Aramco, Shell, Castrol, and a host of others. Source:
  56. 56. @cbinsights 56 AUTO MANUFACTURERS INVESTING IN A WIDE RANGE OF TECH AND INDUSTRIAL FIELDS Auto manufacturers and their venture arms are investing in a number of mapping and connectivity tech startups. Manufacturers like GM and Daimler are also focusing on more capital-intensive endeavors, including energy storage and advanced materials. Source:
  57. 57. @cbinsights 57 CPG COMPANIES ALSO BEGINNING TO MAKE PRIVATE COMPANY INVESTMENTS CPGs have also begun to fund private companies in various spaces. Unilever Ventures has been quite active, investing in personal care startups as well as consumer-facing digital tech. Coca-Cola recently
  58. 58. @cbinsights BENCHMARKING CVCS Comparing corporate VCs by focus area 58
  59. 59. @cbinsights 59 THE CORPORATE VCs THAT COUNT THE MOST UNICORNS Salesforce Ventures continues to lead the field in terms of investments into unicorns. All of these CVCs count at least half a dozen unicorns in their portfolio. Rank CVC Investor Selected Unicorn Company Investments 1 DocuSign, Dropbox, Mulesoft 2 Cloudera, Slack Technologies, Uber 3 Credit Karma, Oscar, SurveyMonkey 4 MongoDB, Snapdeal, Sprinklr 4 Instacart, Nextdoor, Zenefits 6 Lookout, TangoMe, Xiaomi Top CVCs Invested In Global Unicorn Companies
  60. 60. @cbinsights 60 Rank CVC Investor 1 2 3 4 5 Top CVCs By Number of Global Tech Exits in 2015 First exits only. INTEL CAPITAL LEADS CVC INVESTORS WITH MOST TECH EXITS IN 2015 Intel Capital ranked first by number of tech exits for the third straight year. It had more than double the exits of second-place Google Ventures.
  61. 61. @cbinsights 61 COMPARING SELECT CORPORATE VCs: TECH CVC Investor Typical Number of Deals Per Year Median Deal Size Most Frequent Stage 80-90 $12M Series B 70-90 $6M Seed / Angel 50-70 $10M Series A 30-50 $8M Series A 20-30 $15M Series B / C Global data, 2011-2015.
  62. 62. @cbinsights 62
  63. 63. @cbinsights 63 COMPARING SELECT CORPORATE VCs: HEALTHCARE CVC Investor Typical Number of Deals Per Year Median Deal Size Most Frequent Stage 10-20 $20M Series A / B 10-20 $21M Series A 1-10 $21M Series A 1-10 $15M Series A 1-10 $10M Series B Global data, 2011-2015.
  64. 64. @cbinsights 64 COMPARING SELECT CORPORATE VCs: MEDIA CVC Investor Typical Number of Deals Per Year Median Deal Size Most Frequent Stage 20-30 $12M Series B 10-20 $4M Seed / Angel 5-15 $14M Series B 1-10 $11M Series B / C 1-10 $6M Series C Global data, 2011-2015.
  65. 65. @cbinsights 65 COMPARING SELECT CORPORATE VCs: TELECOM CVC Investor Typical Number of Deals Per Year Median Deal Size Most Frequent Stage 5-15 $10M Series A 5-15 $6M Series A 5-10 $8M Series A / B 1-10 $13M Seed / Angel 1-10 $9M Series B Global data, 2011-2015.
  66. 66. @cbinsights 66 COMPARING SELECT CORPORATE VCs: FINANCIAL SERVICES CVC Investor Typical Number of Deals Per Year Median Deal Size Most Frequent Stage 5-15 $21M Series B 1-10 $15M Series B 1-10 $2M Seed / Angel 1-10 $9M Series A Global data, 2011-2015.
  67. 67. @cbinsights CASE STUDY: 67
  68. 68. @cbinsights 68 CITI VENTURES STRATEGY: A FLEXIBLE STRATEGIC APPROACH “Many believe that corporate VCs only act out of self-interest – trying to buy ideas or lock up companies for their own advantage… At Citi Ventures, we don’t look for exclusivity agreements with our portfolio companies and we don’t have any acquisition goals – our priority is to help companies and great ideas scale and grow. ” - “VC in 2015: Vanessa Colella of Citi Ventures on Corporate VC Firms” Russ Garland, Jan6 2015 - Citi Ventures website
  69. 69. @cbinsights 69 CITI VENTURES INVESTMENT PACE ACCELERATES IN 2015 Since making its first investment in 2011, Citi Ventures’ activity has remained steady on an annual basis, participating in roughly $50M to $200M of fundings per year. However, its investment pace accelerated in 2015, topping double-digit deals and $300M for the first time. Citi Ventures Quarterly Financing History Q1’11 – Q4’15
  70. 70. @cbinsights Citi Ventures Internet Investments 2014-2015 70 CITI VENTURES INDUSTRY TRENDS: INCREASINGLY DIVERSE PORTFOLIO BEYOND FINTECH Initially, Citi Ventures focused on fintech and digital banking companies, in line with its core businesses (e.g. Square, InvestLab). However, in recent years it has widened its gaze to encompass security (Pindrop), marketing & customer experience (Optimizely), and Big Data (Datameer). Citi Ventures Internet Investments 2011-2013
  71. 71. @cbinsights 71
  72. 72. @cbinsights Citi Ventures US Geography Heatmap 2014-2015 72 CITI VENTURES GEOGRAPHY STRATEGY: US- AND CALIFORNIA-CENTRIC Not surprisingly, the majority of Citi Ventures’ deals have gone to US-based startups, specifically Californian ones. That said, Citi Ventures has identified more opportunities in New York since 2014, including a $32M Series C round into Betterment. Citi Ventures US Geography Heatmap 2011-2013
  73. 73. @cbinsights 73 CITI VENTURES STAGE STRATEGY: 60%+ OF DEALS MADE AT MID-STAGE Citi Ventures has traditionally focused on mid-stage B and C rounds. However, in 2015 Citi Ventures also completed Series E rounds to Datameer and Chef; it also made a seed investment to Trading Ticket in September. Citi Ventures Investments by Stage 2011-15
  74. 74. @cbinsights 74 ANALYZING CITI VENTURES’ INVESTMENT SYNDICATE Citi Ventures most often co-invests with VC powerhouses Andreessen Horowitz, Battery Ventures, and Bain Capital Ventures. Andreessen and Bain are also among the top feeders of deal flow to Citi Ventures, frequently investing before Citi Ventures commits capital. Citi Ventures Investor Syndicate 2011-15
  75. 75. @cbinsights 75 CITI VENTURES: IN THE NEWS Jan 2012 Jan 2013 Jan 2014 Jan 2015
  79. 79. @cbinsights HAVE QUESTIONS / WANT ACCESS TO THE UNDERLYING DATA? The underlying financing, acquisition, etc. data in this presentation is available on CB Insights. Our Customer Success Team Reach out to your manager. If unsure, reach out to JonathanMcKenna: Reach out to Anand or Set up a free trial account Existing Customer? Not a Customer? 79
  80. 80. @cbinsights 80
  81. 81. @cbinsights About Our Presenter – Kerry Wu 81 • Research Analyst, CB Insights • Published research and data analysis has been featured in The New York Times, Financial Times, Bloomberg, and Quartz, among other major media outlets • Previously management consultant with Simon-Kucher & Partners • Graduate of Columbia University with B.S. in Operations Research and Economics
  82. 82. @cbinsights Web | Twitter | @cbinsights Tel | 212.292.3148 82