The power of corporate venturing is not solely in its ability to generate financial returns for the corporation, though leading CVCs certainly do generate returns. Its real power is in what it enables—a mechanism for partnering with the startup community to bring outside thinking and opportunities into the company. This engagement with the startup community is like a dance—it requires thoughtful planning, carefully orchestrated movement, passion & creativity, and relentless focus on a shared objective. Clareo’s panel discussion, Dancing with the Startups, at the Corporate Venturing & Innovation Partnering Conference in Newport Beach last month highlighted key insights from practitioners in the field. Clareo’s Peter Bryant hosted the panel that included the following experts:
- Trond Unneland Vice President & Managing Executive Chevron Technology Ventures
- Dean DeBiase Chairman Reboot Partners
- Bruce Dines Vice President Liberty Global Inc. Ventures
- Claudia Iannazzo CEO and Partner Pereg Ventures
KEY INSIGHTS
Insight #1: Look at the corporate venture group as a vehicle for purposeful, outside-in innovation, not merely as an investment vehicle. It can help break down conventional thinking, or what we refer to as confirmation bias within the organization by injecting totally new thinking and approaches into the organization. Quotes from our panelists:
“Corporate venturing helps us increase the quantity of deal flow and creates a conduit for new ideas. We see it as a tool for fostering open innovation.” – Tron Unneland, Chevron Technology Ventures
“Corporate venturing is a tool for sensing trends and forces that are shaping the future of your market and building greater visibility into the broader ecosystem around you.” – Bruce Dines, Liberty Global Ventures
Insight #2: To ensure success, corporate venture groups need to build alignment between the corporate venturing function and the strategic objectives of the parent company. Takeaways from our panel:
“Build alignment with the corporate/BU strategy and determine what gaps need to be addressed to help them meet their strategy. This helps to create ‘pull’ for corporate venturing.” – Bruce Dines
“Determine what you want corporate venturing to help accomplish, what role it should play in creating innovation—incremental innovation, expansion into new market spaces, or disruptive growth. The choice of objective is important.” – Dean Debiase
“We deliberately source innovation externally. We don’t care if we actually invest. The goal is to bring new innovation to the operating teams. At times, the value can be captured via partnering and may not require capital investment.” – Bruce Dines
“Since we view corporate venturing as a vehicle to support the corporate strategy, we spend the bulk of energy on strategic fit. Over the course of a given year, we look at 300-400 companies and only complete 3-4 transactions.” – Tron Unneland
Insight #3: Streamline your processes and organization to capture innovation without crushing the startup. Startups are all about creativity and risk. They are process-light. Large well-established organizations are typically process-heavy. This mismatch can make it difficult for the two to work together. Recommendations from our panelists included:
“Streamline processes, making them simpler, quicker, and more efficient. Define them and build alignment internally beforehand. Examples include procurement and investment approval processes. For instance, don’t apply “big company due diligence” to the small company. In many cases the kind of diligence large organizations conduct on transactions (e.g. for M&A) is just not relevant for the startup.” – Claudia Iannazzo, Pereg Ventures
“Separate new venture activity from the rest of the organization. Insulate it from the corporate antibodies that will seek out and kill foreign thinking.” – Peter Bryant, Clareo
Insight #4: Inject passion and entrepreneurial thinking into the organization through innovation partnering. Startups are characterized by bold thinking, creativity, and often, unbounded optimism. This kind of thinking and mindset can breathe new life and energy into larger, well-established organizations. Dean Debiase shared his experiences of innovation partnering at Anixter and challenged the group to see partnering with the startup community as a means of re-igniting passion in corporate leaders. In this sense, the benefits are not simply “sourcing new innovation” but “fostering new thinking and mindsets.” One specific recommendation he offered is to consider rotating up-and-coming leaders from operational units into the venture group.
Corporate venturing, when aligned with business strategy and carefully cultivated, can offer substantial benefits to large corporations that go beyond the obvious. Clareo’s Corporate Venturing practice area team will be exploring the rationale and approaches for corporate venturing in greater detail in an upcoming thought paper.
