More corporate venture capital in sight

More and more large compa­nies have reali­zed that a ventures capi­tal arm not only offers a stra­te­gic compo­nent to gain access to pionee­ring tech­no­lo­gies as early as possi­ble, but can also gene­rate finan­cial returns. With CVC, both goals can often be opti­mally combined.

There is more corpo­rate venture capi­tal in recent years that can fill the ever-growing finan­cing gap that is incre­asingly opening up after seed and early-stage finan­cing in Germany. The reason for this is the rela­tively good supply of capi­tal in the early phase through busi­ness angels and HTGF, Bayern Kapi­tal, etc. Howe­ver, for the finan­cing rounds requi­red there­af­ter, there are fewer and fewer tradi­tio­nal VCs that can provide suffi­ci­ent capital.

For exam­ple, Carta­gena Capi­tal has been active as Tele­fo­nica Ventures’ global deal sourcing advi­sor since early 2011. This is the CVC arm of Spain’s Tele­fo­nica, which has so far inves­ted mainly in the US and Israel. This is very inte­res­t­ing for us, espe­ci­ally conside­ring that Tele­fo­nica is mainly active in Europe and Latin America as a provi­der of tele­com­mu­ni­ca­ti­ons services. To this end, howe­ver, the Tele­fo­nica Group has still laun­ched a family of funds of over € 300m under the name ‘Amerigo’ in Brazil, Colom­bia, Chile and Spain, in order to be more active in the core count­ries. In addi­tion, there is also the incu­ba­tor ‘Wayra’ in 14 cities, inclu­ding opened its doors in Munich at the end of 2012.

In the CVC area, we natu­rally first see the indus­tries that are in the tech­no­logy segment. Tradi­tio­nally, play­ers from the tele­com sector (T‑Venture, Voda­fone Ventures, Tele­fo­nica Ventures, Qual­comm Ventures), energy (Siemens Ventures Capi­tal, Yellow&Blue, which is the VC arm of Dutch utility Nuon from the Vatten­fall group), Green­coat Capi­tal (form­erly Novus­mo­dus, CVC of Irish utility ESB) and chemi­cals (Evonik, BASF Venture Capi­tal, etc.) have laun­ched corpo­rate venture funds. Of course, the media indus­try is also very active in CVC, e.g.: Pro7Sat1 Ventures, DuMont Ventures, DLD Ventures (the invest­ment arm of Burda). In many cases, CVCs invest both directly in compa­nies and indi­rectly as fund-in-fund inves­tors in other VC funds to reach a wider geogra­phic radius.

Certainly, the invest­ment stra­te­gies of indi­vi­dual compa­nies with CVC acti­vi­ties differ greatly, but I don’t think it’s prima­rily a matter of geogra­phic diffe­ren­tia­tion. The only excep­tion is perhaps France, where there seem to be more and more multi-corpo­rate venture capi­tal funds. So far, for exam­ple, Aster Capi­tal, the VC Fund of Schnei­der Elec­tric, Alstom and Rhodia. — Recently, there also seems to be an effort by compa­nies in diffe­rent indus­tries to launch joint VC funds. Inci­den­tally, there are funds from global firms such as Google Ventures that invest exclu­si­vely in the U.S., for exam­ple, with average tickets of less than $1m. Of course, Google still acqui­res smal­ler Euro­pean compa­nies, but direct invest­ments as mino­rity stakes are a rarity.

The invest­ment stra­tegy of funds such as 3M New Ventures or BMW iVen­tures is also inte­res­t­ing. As a global but origi­nally U.S.-based corpo­ra­tion, 3M has rolled out its VC acti­vi­ties world­wide from Munich. This is unusual, given that the USA is conside­red the birth­place of venture capi­tal. On the other hand, the Munich-based car manu­fac­tu­rer BMW has loca­ted its iVen­tures Fund in the USA — not in Sili­con Valley or Boston, but in New York with its other­wise media-heavy imprint as Sili­con Alley. In summary, in an incre­asingly globa­li­zed world, a global company’s venture fund must be active in all major markets, regard­less of its headquarters.