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.