How corporations can innovate faster by understanding and working with startups

1. #vcdata
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November 10, 2015
STARTUPS AND
ACCELERATING
CORPORATE
INNOVATION
asanwal@cbinsights.com
@cbinsights

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
http://www.cbinsights.com
”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. A FEW OF OUR HAPPY CUSTOMERS
The most publicly reference-able customers of anyone in the industry
See what other customers haveto say at
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Sr. Director, CorporateDevelopment
SalesforceVentures
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thematic approach that really captures market
activity….we've found CBI to havethe best access for
the most accurate market view.”
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Ventures Director
Castrol innoVentures
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Corporate Development
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Investments & Biz Dev
Comcast Ventures
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Portfolio Manager
Telefonica
Ventures
3

4. WHO THE HECK AM I?
4
Anand Sanwal
CEO & Co-­Founder
@asanwal
asanwal@cbinsights.com
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. 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. -
f
•
31.771
Vo
$2.96bn

7. THE FASTER PACE OF DISRUPTION
What got you here won’t get you there
6

8. TODAY’S EMERGING BUSINESS MODELS & STARTUPS
BECOME TOMORROW’S PROBLEMS
11@cbinsights
Source: Clay Christensen Disruptive Innovation Framework

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. …AND THE THREATS ARE MULTIPLYING
Cost to Launch a Tech Startup
14@cbinsights
Source:
Upfront
Ventures

11. TECHNOLOGY ADOPTION IS QUICKER THAN EVER
The penetration of technology happens quicker than ever before. Time is not on your side.
16@cbinsights

13. HOW QUICKLY DOES ADOPTION HAPPEN?
17@cbinsights
Source:
Wealthfront,
New
York
Post

14. WHATSAPP USER GROWTH?
17@cbinsights
Source:
Facebook

15. UNBUNDLING WELLS FARGO
All the startups attacking Wells Fargo (or Citi or Bank of America) product & service lines.
21@cbinsights
Source:
https://www.cbinsights.com/blog/disrupting-­‐banking-­‐fintech-­‐startups/

16. WORRY LESS ABOUT THESE COMPETITORS
Disruptive, discontinuous innovation rarely comes from your giant competitive peers.
19@cbinsights

17. 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

18. 1 Tech
208
..•
�-
,
31.77°/o

19. SO WHAT’S A CORPORATION NOT TO DO
The perils of innovation theater
1
6

20. INNOVATION THEATER
20@cbinsights

21. HIRE A CHEF
20@cbinsights

22. BRING ON AN INNOVATION SHERPA OR DIGITAL PROPHET
20@cbinsights

23. HAVE A STARTUP’Y OFFICE
20@cbinsights
open office xBox

24. VISIT SILICON VALLEY – “EMBRACE INNOVATION”
20@cbinsights

26. LAUNCH AN ACCELERATOR – GET ARTICLE IN TECHCRUNCH
20@cbinsights

27. HIRE A CHEF
20@cbinsights

28. CASUAL DRESS CODE
20@cbinsights

29. HIRE SOMEONE WHO PLATEAUED AT GOOGLE OR APPLE
20@cbinsights

30. 2
6
POSSIBILITIES NOT PROBLEMS
The “Yes, and…” approach

31. 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

32. Tech
..
•
J
31.7710/o
$2.96b
,, -
8

33. THE END STATE FOR MOST STARTUPS IS FAILURE
10@cbinsights source:
https://www.cbinsights.com/blog/venture-­‐capital-­‐funnel/

34. THOSE GUYS ARE NOT THE PROBLEM
10@cbinsights

35. THE ONES THAT SURVIVE BECOME THE PROBLEM
10@cbinsights

36. 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….”

37. STOP THIS! IT IS INTELLECTUALLY LAZY
10@cbinsights Cl

38. 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 –
asanwal@cbinsights.com

39. HOMEWORK #1 – WHY?
10@cbinsights
• Forcing a cultural mindset shift more
than anything
• Optimism leads to innovation. “Yes,
and…” is inherently optimistic

41. 3
5
UNBUNDLE THYSELF
Who might eat our lunch

42. UNBUNDLING FEDEX
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/startups-­‐disrupting-­‐fedex-­‐ups/

43. UNBUNDLING APPLE iOS
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/unbundling-­‐apple-­‐ios/

44. UNBUNDLING STARWOOD (THE HOTEL)
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/disrupting-­‐european-­‐banking-­‐fintech-­‐startups/

45. DISRUPTING WALKING
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/disrupting-­‐walking-­‐transportation-­‐startups/

46. Tech
;
$13.5bn
208 $2,.96b
•

47. UNBUNDLING THE AUTOMOBILE
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/startups-­‐drive-­‐auto-­‐industry-­‐disruption/

48. UNBUNDLING PAYCHEX
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/disrupting-­‐walking-­‐transportation-­‐startups/

49. UNBUNDLING HSBC
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/disrupting-­‐european-­‐banking-­‐fintech-­‐startups/

50. UNBUNDLING HONEYWELL
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/disrupting-­‐honeywell-­‐startups/

51. UNBUNDLING P&G
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/disrupting-­‐procter-­‐gamble-­‐cpg-­‐startups/

52. UNBUNDLING CRAIGSLIST
.
22@cbinsights
Source:
https://www.cbinsights.com/blog/craigslist-­‐unbundling/

54. 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

55. 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

56. 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

57. BUILD, BUY OR PARTNER
How are corporations doing it today?

58. 5
1
BUILD
Incremental or disruptive?

60. CORPORATIONS ARE GOOD AT FLAVOR INNOVATION
7@cbinsights

61. COPY EMERGING STRATEGIES WHICH HAVE TRACTION
7@cbinsights

62. THE DISRUPTIVE MOONSHOTS ARE OFTEN HARDER
7@cbinsights

63. PARTNER
Really access innovation or good PR

64. HAVE SKIN IN THE GAME OR DON’T WASTE STARTUP TIME
“Joint value
creation”
@CBINSIG
HTS
#DATADRIVENNYC 5
6

65. PARTNER IN EXCHANGE FOR EQUITY – MISALIGNED
INCENTIVES?
• $25
million
investment
• Howard
Schultz
joined
board
• $56
million
loss
to
Square
(discounted
card
fees)

67. NORDSTROM DOES IT WELL
Source: https://www.cbinsights.com/blog/nordstrom-e-commerce-case-study/

68. WALK BEFORE YOU RUN

69. 6
0
BUY
A nibble or a full bite?

70. CORPORATE VC TODAY: FROM TECH TO HEALTHCARE TO
FINANCE TO ENERGY TO MEDIA
7@cbinsights

71. 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

72. 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

73. 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

75. 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

76. 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.
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Source: https://www.cbinsights.com/blog/corporate-venture-unicorns/

77. CORPORATE VCs WITH THE MOST UNICORNS
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Source: https://www.cbinsights.com/blog/corporate-venture-unicorns/

78. INTEL CAPITAL TOPS CORPORATE VC FIRMS BY EXITS
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*Exits
by
Comcast
Interactive
Capital
since
2011
were
counted
under
Comcast
Ventures

79. THE UNICORNS WITH THE MOST STRATEGIC ACQUIRERS
11@cbinsights
Source: https://www.cbinsights.com/blog/corporate-venture-unicorns/

80. 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: https://www.cbinsights.com/blog/top-venture-capital-corporate-syndicate/

81. THE MOST ACTIVE CORPORATE VENTURE CAPITAL GROUPS
11@cbinsights
CVC Investor Recent New Investments

83. THE MOST ACTIVE CORPORATE VENTURE CAPITAL GROUPS
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CVC Investor Recent New Investments

84. 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

85. 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

86. 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

87. 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

88. 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

90. 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

91. 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

92. Technology companies, especially VC-­backed ones, are
increasingly (and somewhat artificially) expensive

93. The Dichotomy – Exiting for $1B way harder than financing

94. There are deals at the low end but for many corporations who
want needle-­moving M&A, this doesn’t work

95. Top Acquirers of 2015
1 - 5 6 - 10 11 - 15
Microsoft Snapdeal Tripadvisor
Google IBM Motorsport.com
Accenture Zealot Networks FoodPanda
Yello Mobile Amazon Apple Inc.
j2 Global Twitter Rocket Internet
Top Tech Acquirers: Q1'15 - Q3'15

97. Web | www.cbinsights.com
Twitter | @cbinsights
Email | asanwal@cbinsights.com
Tel | 212.292.3148
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