An overview of the Corporate Venture Capital world

1. CORPORATE VENTURE CAPITAL
Davide Cecchini
Corporate Venture Capital – Davide Cecchini © 2020

2. Masters of Corporate Venture Capital
by Andrew Romans
Andrew Romans
• CEO & GP at 7BC VC
• Partner at Rubicon VC
• Former entrepreneur
• 20+ years in venture capital
Corporate Venture Capital – Davide Cecchini © 2020

3. Venture Capital (VC)
• It dates back to the ‘60s (Small Business Act, 1958)
• It’s an investment firm that creates closed funds
• Has its own investment thesis and angle
• Has a Limited-Partner (LP) – General Partner (GP) structure
• Collects money from LPs and invests over a period of 10 years
• 2&20 structure: makes money by receiving a management fee (an annual
2% plus ) and part of the gains (20% - after a hurdle rate, usually at 6%)
Corporate Venture Capital – Davide Cecchini © 2020

4. How much is VC worth?
Source: CB Insights. MoneyTree Report Q3 2020
https://www.cbinsights.com/reports/CB-Insights_MoneyTree-Q3-2020.pdf
That’s Q3 2020
JUST IN 3 MONTHS!
Corporate Venture Capital – Davide Cecchini © 2020

5. Corporate Venture Capital (CVC)
Broad definition of CVC
Direct participation of a corporation into another
company by acquiring shares of capital, with a minority
position (usually below 20%)
It’s almost exclusively directed toward technological
and/or innovative with high potential growth (i.e.
startups)
Corporate Venture Capital – Davide Cecchini © 2020

6. Corporate Venture Capital (CVC)
• It’s Venture Capital done by corporation (fully captive, no LPs)
• It differs from:
• Merger & Acquisition
• Partnership & Joint Ventures
• Procurement
• Open Innovation
It is similar to:
• corporate venturing
It’s often referred as “corporate venture capital program”
Corporate Venture Capital – Davide Cecchini © 2020

7. The place of CVC within the corporation
Corporate Venture Capital – Davide Cecchini © 2020
M&A
Manages the
process of fully
integrating
another company
Open Innovation
Fosters
relationships with
external
companies
Procurement
Acquires goods
and services from
external
companies
Partnership &
Joint Ventures
Manages the
relationship and
business
opportunities with
other companies

8. M&A
Manages the
process of fully
integrating
another company
Corporate
Venture Capital
Manages the
collaboration with
other companies
that are
participated by
the corporation
Open Innovation
Fosters
relationships with
external
companies
Procurement
Acquires goods
and services from
external
companies
Partnership &
Joint Ventures
Manages the
relationship and
business
opportunities with
other companies
The place of CVC within the corporation
Corporate Venture Capital – Davide Cecchini © 2020

9. How much is CVC worth?
Source: CB Insights. The 2019 Global CVC Report
https://www.cbinsights.com/research/report/corporate-venture-capital-trends-2019/
Corporate Venture Capital – Davide Cecchini © 2020

10. Who is doing CVC?
Corporate Venture Capital – Davide Cecchini © 2020

11. Most active CVCs
Source: CB Insights. The 2019 Global CVC Report
https://www.cbinsights.com/research/report/corporate-venture-capital-trends-2019/
Corporate Venture Capital – Davide Cecchini © 2020

12. Oil&Gas CVCs
Source: CB Insights. Oil & Gas Corporates Continue To Invest In Clean Tech In 2020
https://app.cbinsights.com/research/oil-gas-corporates-clean-tech-sustainability-expert-intelligence/
Corporate Venture Capital – Davide Cecchini © 2020

13. All is good but
…
often CVC programs fail!
Corporate Venture Capital – Davide Cecchini © 2020

14. Source:
https://www.researchgate.net/publication/227997750_Why_Corporate
_Venture_Capital_Funds_Fail_-
_Evidence_from_the_European_Energy_Industry
Source: https://www.bain.com/insights/five-things-
companies-get-wrong-about-corporate-venture-capital/
CVC programs often fail
Corporate Venture Capital – Davide Cecchini © 2020

15. Strategic
vs.
Financial Goals
(“there’s nothing strategic
in losing money”)
Corporate Venture Capital – Davide Cecchini © 2020

16. Long term
goals
(make a 10 years plan)
Corporate Venture Capital – Davide Cecchini © 2020

17. Risk of
Adverse
Selection
Corporate Venture Capital – Davide Cecchini © 2020

18. Position of the CVC
in the organization
(must stay at the top)
Corporate Venture Capital – Davide Cecchini © 2020

19. Relationship with
business units
(too many pitchers,
not enough catchers)
Corporate Venture Capital – Davide Cecchini © 2020

20. CVC team and
incentives
(the CVC team needs
insiders and VC experts)
Corporate Venture Capital – Davide Cecchini © 2020

21. Intel Capital
• Exists since 30 years
• It is separated from the
main corporation
• Has its own allocation of
capital
• Pursue financial goals (mid-
term) and strategic goals
(long term)
• Has a long list of exits (533)
MOST RECENT INVESTMENTS
Computer vision
Development SW to simplify
HW architecture/infrastructure
SW to program Field
Programmable Gate Arrays
(semiconductors)
Corporate Venture Capital – Davide Cecchini © 2020

22. Salesforce Ventures
• Invests mainly in Salesforce
related companies (add-
ons) to expand its
ecosystem
• Has a clear win-win strategy
for the startups
• Invests to gather insights
(also by investing small
checks)
• Investments in startups are
clear M&A targets
MOST RECENT INVESTMENTS
GDPR, cybersecurity
CRM configurator
Computer vision for
remote assistance
Corporate Venture Capital – Davide Cecchini © 2020

23. Reasons to start a CVC
• Be open to external
innovation
• Do business intelligence
• Partnership opportunities
• Inform and reinforce strategic
decisions
• Provide technology to a
startup
• Create a pipeline for the M&A
• Create a set of future
opportunities
• Benefit from your own
competitive advantage and
knowledge of the market
• Bring entrepreneurial culture
into the corporation
• Access human capital and
talent
Corporate Venture Capital – Davide Cecchini © 2020

24. THANK YOU!
Corporate Venture Capital
Davide Cecchini
davideachille.cecchini@gmail.com
Corporate Venture Capital – Davide Cecchini © 2020