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CB Insights Live: Startups And Accelerating Corporate Innovation


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CB Insights Live: Startups And Accelerating Corporate Innovation

  1. 1. #vcdata © 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International pr ovides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. November  10,  2015 STARTUPS  AND   ACCELERATING   CORPORATE   INNOVATION @cbinsights
  2. 2. ABOUT  CB  INSIGHTS A  unique  combination  of  data  science  and  machine  learning  to  help  you  see  what’s  next. About  CB  Insights Backed  by  the  National  Science  Foundation,  CB  Insights  uses  data  science  and  machine  learning  to   help  our  customers  predict  what’s  next—their  next  customer,  their  next  investment,  the  next  market  they   should  attack,  the  next  move  of  their  competitor  or  the  next  company  they  should  acquire. The  world’s  leading  global   corporations  including  the  likes  of   Cisco,  Salesforce,  Castrol  and  Gartner   as  well  as  top  tier  VCs  including,  NEA,   Upfront  Ventures,  RRE,  and  FirstMark   Capital  rely  on  CB  Insights  to  make   decisions  based  on  data,  not  decibels.   To  make  your  life  easier,  visit ”A detailed discussion of data collection and how the company parses them is written by CB Insights’data scientists; it convincingly tells the story of scalability and accuracy for what they call “The Cruncher.” From “Predictive Analytics And Novel Visualization Draw Customers To 'Must Have' Data” publishedApril 8, 2015 2
  3. 3. A FEW OF OUR HAPPY CUSTOMERS The most publicly reference-able customers of anyone in the industry See what other customers haveto say at “Designed by a VC insider who truly knows the space and understands end-user needs.” “We're using CB Insights at SalesforceVentures to analyze industry trends that are relevant to our strategy. It's helped improve our efficiency.” Matt Garratt Sr. Director, CorporateDevelopment SalesforceVentures “CB Insights provides our team with a holistic and thematic approach that really captures market activity….we've found CBI to havethe best access for the most accurate market view.” “We have been looking for a tool that could give us the ability to track, research and identify investment opportunities. CB Insights provides this simply and in a simple, easy to use interface. The depth of information that we get is exactly what we need. Great product.” Jonathan Tudor Ventures Director Castrol innoVentures “CB Insights perfectly illustrates what I expect today from such online services tostay tuned to our fast- changing Tech Landscape. Accurate and up-to-date data mash-ups, intuitive UIs, smart data visualization capabilities and direct API access… all packaged together with straightforward pricing.” Simon Mencarelli Senior Manager,Strategic Planning Dassault Systems “CB Insights' intuitiveuser interface, analytical capabilities, and detailed investment information create a very powerful tool for our team's research needs.” Nate D’Anna Corporate Development Cisco Greg Bae Investments & Biz Dev Comcast Ventures Jack Leeney Portfolio Manager Telefonica Ventures 3
  4. 4. WHO  THE  HECK  AM  I? 4 Anand  Sanwal CEO  &  Co-­Founder @asanwal Prior  to  launching  CB  Insights  in  2010,  Anand  managed  the   $50  million  Chairman's  Innovation  Fund  at  American  Express   and  also  worked  in  their  corporate  venture  and  M&A   units.   Before  American  Express,  he  worked  overseas  in  India,   China  and  London  for  a  #  of  startup  companies.  He  is  the   author  of  a  book  "Optimizing  Resource  Allocation"   and  has   degrees  in  Chemical  Engineering  from  the  University   of   Pennsylvania   and  in  finance  and  accounting  from  the   Wharton  School  of  Business.
  5. 5. WHAT  WE’LL  COVER 1. The  faster  pace  of  disruption 2. Innovation  theater 3. Possibilities  not  problems  – The  “Yes, and…”  approach 4. Unbundle  thyself 5. Build,  Buy  or  Partner?
  6. 6. - f • 31.771 Vo $2.96bn
  7. 7. THE  FASTER  PACE  OF  DISRUPTION What  got  you  here  won’t  get  you  there 6
  8. 8. TODAY’S  EMERGING  BUSINESS  MODELS  &  STARTUPS   BECOME  TOMORROW’S  PROBLEMS 11@cbinsights Source: Clay Christensen Disruptive Innovation Framework
  9. 9. IT’S  HARDER  THAN  EVER  TO  STAY  ON  TOP… 13@cbinsights The  lifespan  of  an  S&P  500  company  is  shorter  and  shorter.
  10. 10. …AND  THE  THREATS  ARE  MULTIPLYING Cost  to  Launch  a  Tech  Startup 14@cbinsights Source:  Upfront  Ventures
  11. 11. TECHNOLOGY  ADOPTION  IS  QUICKER  THAN  EVER The  penetration  of  technology  happens  quicker  than  ever  before.  Time  is  not  on  your  side. 16@cbinsights
  12. 12. HOW  QUICKLY  DOES  ADOPTION  HAPPEN? 17@cbinsights Source:  Wealthfront,  New  York  Post
  13. 13. WHATSAPP  USER  GROWTH? 17@cbinsights Source:  Facebook
  14. 14. UNBUNDLING  WELLS  FARGO All  the  startups  attacking  Wells  Fargo  (or  Citi  or  Bank  of  America)  product  &  service  lines. 21@cbinsights Source:­‐banking-­‐fintech-­‐startups/
  15. 15. WORRY  LESS  ABOUT  THESE  COMPETITORS Disruptive,  discontinuous  innovation  rarely  comes  from  your  giant  competitive  peers.   19@cbinsights
  16. 16. AND  WORRY  MORE  ABOUT  DEATH  BY  A  THOUSAND  CUTS There  is  an  army  of  emerging  players  that  are  attacking  legacy  players  at  an  individual  product  &  service  level.   20@cbinsights
  17. 17. 1 Tech 208 ..• �- , 31.77°/o
  18. 18. SO  WHAT’S  A  CORPORATION  NOT TO  DO The  perils  of  innovation  theater 1 6
  19. 19. INNOVATION  THEATER 20@cbinsights
  20. 20. HIRE  A  CHEF 20@cbinsights
  22. 22. HAVE  A  STARTUP’Y  OFFICE 20@cbinsights open  office xBox
  23. 23. VISIT  SILICON  VALLEY  – “EMBRACE  INNOVATION” 20@cbinsights
  25. 25. HIRE  A  CHEF 20@cbinsights
  26. 26. CASUAL  DRESS  CODE 20@cbinsights
  27. 27. HIRE  SOMEONE  WHO  PLATEAUED  AT  GOOGLE  OR  APPLE   20@cbinsights
  28. 28. 2 6 POSSIBILITIES  NOT  PROBLEMS The  “Yes,  and…”  approach
  29. 29. THE  HEAD-­IN-­SAND  DISMISSIVE   APPROACH  TO  DEALING   WITH  INNOVATION,  STARTUPS  &  THREATS 10@cbinsights Brian Moynihan, CEO of America’s second-largest bank by assets, said most of the robo- advisers are going after investors who aren’t rich enough for the bank to worry about. They are below the bank’s wealth “cut off,” Moynihan said on the bank’s quarterly earnings call, “for lack of a better term.” Source: Q1 2015Bank ofAmerica earnings call recapby Quartz
  30. 30. Tech .. • J 31.7710/o $2.96b ,, - 8
  31. 31. THE  END  STATE  FOR  MOST  STARTUPS  IS  FAILURE 10@cbinsights source:­‐capital-­‐funnel/
  32. 32. THOSE  GUYS  ARE  NOT  THE  PROBLEM 10@cbinsights
  33. 33. THE  ONES  THAT  SURVIVE  BECOME  THE  PROBLEM 10@cbinsights
  34. 34. BUT  MOST  INCUMBENTS  FOCUS  ON  WHY  THEY’RE  BETTER   AND/OR  WHY  THE  STARTUPS  WILL  FAIL 10@cbinsights “Our  brand  is  trusted…” “Supply  chain  is  complex…” “This  is  a  highly  regulated  industry….” “We’ve  been  doing  this  for  140  years….” “Clients  trust  us.  They  won’t  trust  some  startup….” “We  have  a  cost  advantage….” “Our  risk  management  capabilities  are  proven….”
  35. 35. STOP  THIS!  IT  IS  INTELLECTUALLY  LAZY   10@cbinsights Cl
  36. 36. HOMEWORK  #1  – FOCUS  ON  POSSIBILITIES   NOT  PROBLEMS 10@cbinsights 1. Identify  a  startup  or  emerging  industry that  you’ve  previously  “pooped  on” 2. Write  down  3  to  5  reasons  you  think  it might  work  and  become  successful 3. Email  me  your  answers  –
  37. 37. HOMEWORK  #1  – WHY? 10@cbinsights • Forcing  a  cultural  mindset  shift  more than  anything • Optimism  leads  to  innovation.  “Yes, and…”  is  inherently  optimistic
  38. 38. 3 5 UNBUNDLE  THYSELF Who  might  eat  our  lunch
  39. 39. UNBUNDLING  FEDEX . 22@cbinsights Source:­‐disrupting-­‐fedex-­‐ups/
  40. 40. UNBUNDLING  APPLE  iOS . 22@cbinsights Source:­‐apple-­‐ios/
  41. 41. UNBUNDLING  STARWOOD  (THE  HOTEL) . 22@cbinsights Source:­‐european-­‐banking-­‐fintech-­‐startups/
  42. 42. DISRUPTING  WALKING . 22@cbinsights Source:­‐walking-­‐transportation-­‐startups/
  43. 43. Tech ; $13.5bn 208 $2,.96b •
  44. 44. UNBUNDLING  THE  AUTOMOBILE . 22@cbinsights Source:­‐drive-­‐auto-­‐industry-­‐disruption/
  45. 45. UNBUNDLING  PAYCHEX . 22@cbinsights Source:­‐walking-­‐transportation-­‐startups/
  46. 46. UNBUNDLING  HSBC . 22@cbinsights Source:­‐european-­‐banking-­‐fintech-­‐startups/
  47. 47. UNBUNDLING  HONEYWELL . 22@cbinsights Source:­‐honeywell-­‐startups/
  48. 48. UNBUNDLING  P&G . 22@cbinsights Source:­‐procter-­‐gamble-­‐cpg-­‐startups/
  49. 49. UNBUNDLING  CRAIGSLIST . 22@cbinsights Source:­‐unbundling/
  50. 50. HOMEWORK  #2  – WHO  ARE  THE  ATTACKERS? The  players  that  might  inflict  upon  us  death  by  a  thousand  cuts 10@cbinsights • List  your  business’  products  &  services (or  use  your  website  if  possible) • Identify  all  the  startups  who  are attacking  each  product  &  service (include  the  ones  you  think  are  stupid.  Remember  “Yes,  and…”) • Study  those  gaining  traction,  look  for themes  among  business  models,  etc
  51. 51. HOMEWORK  #2  – WHY? 10@cbinsights • Help  you  understand  the  landscape  in one  fell  swoop  (not  a  one-­time  effort) • Catalyzes  action.  Visceral  view  into threats  works  to  get  leadership motivated
  52. 52. HOMEWORK  #2  -­ AUTOMATING  THE  IDENTIFICATION  OF   STARTUPS  WITH  MOMENTUM  (THE  ONES  TO  WATCH) 4 9 Get  in  front  of  the  best   startups  early Understand  signals  of   growth • Hiring  activity • Web  traffic • Media  chatter • Social  media  volume • Sentiment • Industry  health • Investor  quality • Tech/software  stack Stalk  the  smart  money Identify  performance  metrics  momentum
  53. 53. BUILD,  BUY  OR  PARTNER How  are  corporations  doing  it  today?
  54. 54. 5 1 BUILD Incremental  or  disruptive?
  58. 58. PARTNER Really  access  innovation  or  good  PR
  60. 60. PARTNER  IN  EXCHANGE  FOR  EQUITY  – MISALIGNED   INCENTIVES? • $25  million  investment • Howard  Schultz  joined  board • $56  million  loss  to  Square  (discounted  card fees)
  61. 61. NORDSTROM  DOES  IT  WELL Source:
  62. 62. WALK  BEFORE  YOU  RUN  
  63. 63. 6 0 BUY A  nibble  or  a  full  bite?
  65. 65. 2015:  CORPORATE  VENTURE  CAPITAL  ON  TRACK  FOR  NEW   HIGHS The  first  half  of  2015  saw  corporate  VCs  participate  in  357  deals  totaling  $7.85B.  At  the  current  run  rate,   corporate  VC  deal  activity  is  on  track  to  top  2014’s  high.  Funding  dollars  involving  corporate  VC  arms  has   topped  $3B  in  each  of  the  last  3  quarters. 6@cbinsights @cbinsights
  66. 66. CVC  DEAL  SIZES  ARE  NOW  DECIDEDLY  LARGER  THAN  VC   OVERALL Average  deal  size  with  corporate  venture  participation  has  topped  $21M+  in  five  of  the  last  six  quarters.  In   contrast,  average  corporate  venture  deal  sizes  stood  ≤ $17M  in  2013. 11@cbinsights
  67. 67. CORPORATE  VCs  PARTICIPATE  IN  1  OF  EVERY  5  VC  DEALS   IN  2015 Corporate  venture  firms  participated  in  just  over  20%  of  the  1,768  venture-­backed  rounds  in  the  first  half  of   2015.  That’s  compared  to  CVCs  participating  in  15%  of  venture  deals  in  H1  2013. 11@cbinsights
  68. 68. NUMBER  OF  ACTIVE  CORPORATE  VENTURE  FIRMS  IS  UP   82%  SINCE  Q1’12 106  different  corporate  VC  firms  completed  an  investment  in  Q1’15  – a  multi-­year  high.  That’s  a  82%  jump   from  the  same  quarter  three  years  ago. 11@cbinsights
  69. 69. MORE  THAN  HALF  OF  ALL  US  UNICORNS  ARE  BACKED  BY   CORPORATE  VCs It’s  not  just  VCs  who  are  hunting  unicorns.  Among  the  74  US  private  companies  valued  at  $1B  or  more,   51%  have  a  corporate  venture  unit  as  an  investor. 11@cbinsights Source:
  70. 70. CORPORATE  VCs  WITH  THE  MOST  UNICORNS 11@cbinsights Source:
  71. 71. INTEL  CAPITAL  TOPS  CORPORATE  VC  FIRMS  BY  EXITS 11@cbinsights *Exits  by  Comcast  Interactive  Capital  since  2011  were  counted  under  Comcast  Ventures
  72. 72. THE  UNICORNS  WITH  THE  MOST  STRATEGIC  ACQUIRERS 11@cbinsights Source:
  73. 73. KLEINER  PERKINS  IS  THE  MOST  FREQUENT  VENTURE   CAPITAL  CO-­INVESTOR  WITH  CVCs Kleiner Perkins and NEAare the most frequent co-investorswith CVCs since 2010 followed byAndreessen Horowitz. 11@cbinsights Source:
  74. 74. THE  MOST  ACTIVE  CORPORATE  VENTURE  CAPITAL  GROUPS 11@cbinsights CVC Investor Recent New Investments
  75. 75. THE  MOST  ACTIVE  CORPORATE  VENTURE  CAPITAL  GROUPS 11@cbinsights CVC Investor Recent New Investments
  76. 76. DIGITAL  HEALTH  /  HEALTH  IT  DEALS  BY  CVCs  CLIMBING Corporate  venture  deals  into  the  growing  digital  health  and  health  IT  arena  rose  44%  between  2011  and   2014. 19@cbinsights NOTABLE  CVC   INVESTORS Selectinvestments Selectinvestments Selectinvestments
  77. 77. FIN  TECH  DEALS  BY  CVCs  JUMP Corporate venture dealsinto financial tech or ‘fin tech’ ticked up 75% between 2011 and 2014. 19@cbinsights NOTABLE  CVC   INVESTORS Selectinvestments Selectinvestments Selectinvestments
  78. 78. CYBERSECURITY  CVC  DEALS  HIT  HIGH  IN  2014 As reported threatscontinue to rise, corporate venture deals into cybersecurityrose 25% on a YoY basis in 2014 and hit a quarterlyhigh in Q3’14. 19@cbinsights NOTABLE  CVC   INVESTORS Selectinvestments Selectinvestments
  79. 79. COMPARING  SELECT  CORPORATE  VCs:  TECH 19@cbinsights CVC Investor Number of New Deals Per Year Most Frequent Stage Median Deal Size 50-60 $8M Seed $13M 10-20 Series B Series B Series A$15M20-30 30-40 $11M $15M Series C10-20
  80. 80. COMPARING  SELECT  CORPORATE  VCs:  HEALTHCARE 19@cbinsights CVC Investor Number of New Deals Per Year Most Frequent Stage Median Deal Size 1-10 $17M Series A $9M1-10 Series A Series C Series A$10M1-10 1-10 $14M $24M Series B1-10
  81. 81. COMPARING  SELECT  CORPORATE  VCs:  MEDIA 19@cbinsights CVC Investor Number of New Deals Per Year Most Frequent Stage Median Deal Size 10-20 $10M Series A $8M 1-10 Series B Series B Seed$3M1-10 1-10 $15M $6M Series C1-10
  82. 82. COMPARING  SELECT  CORPORATE  VCs:  FINANCIAL   SERVICES 19@cbinsights CVC Investor Number of New Deals Per Year Most Frequent Stage Median Deal Size 1-10 $19M Series C $14M1-10 Series B Series D Series C$19M1-10 1-10 $28M
  83. 83. Technology  companies,  especially  VC-­backed  ones,  are   increasingly  (and  somewhat  artificially)  expensive
  84. 84. The  Dichotomy  – Exiting  for  $1B  way  harder  than  financing
  85. 85. There  are  deals  at  the  low  end  but  for  many  corporations  who   want  needle-­moving  M&A,  this  doesn’t  work
  86. 86. Top  Acquirers  of  2015 1 - 5 6 - 10 11 - 15 Microsoft Snapdeal Tripadvisor Google IBM Accenture Zealot Networks FoodPanda Yello Mobile Amazon Apple Inc. j2 Global Twitter Rocket Internet Top Tech Acquirers: Q1'15 - Q3'15
  87. 87. Web | Twitter | @cbinsights Email | Tel | 212.292.3148 33