state of corporate venturing - a vc perspective on markets and outlook
TRANSCRIPT
State of Corporate Venturing
Thomas Grota, Investment Director at Deutsche Telekom AG
While CVC deal number increases... • General Motors, under pressure from Ford, Google, Apple, Uber and just about
every other big company doing something car-related, made a $500 million investment in Lyft this week. The deal includes a partnership that will focus on developing a car-hailing service using autonomous driving technology.
• Pharmaceutical giant Roche led a $175 million in Flatiron Health, the biotech startup that sells software related to cancer treatment. Allen & Company, Baillie Gifford and Casdin Capital also kicked in for this latest round; previous investors include Google Ventures and First Round Capital
• UPS led a $28 million funding round for the same-day delivery startup Deliv. Other investors included Upfront Ventures, RPM Ventures, General Growth Properties and Simon Property Group (Wall Street Journal).
• Struggling $10 billion grocery chain Whole Foods is leading an unknown sized investment in the $2 billion grocery delivery startup Instacart, and the two are inking an exclusive five-year delivery partnership.
... there is Winter in Silicon Valley
4
Venture Capital is a tough and risky Business.
55% of US investments are written off
0 5
10 15 20 25 30 35 40 45 50
x<0.5 0.5<x<1 x=1 1<x<2 2<x<5 x>5
% Cost % Value
62% of EU investments are written off
0
10
20
30
40
50
60
x<0.5 0.5<x<1 x=1 1<x<2 2<x<5 x>5
% Cost % Value
Entrepreneurs need less capital to start … Thanks to cloud, viral marketing via social & easy payment.
4.000.000 €
400.000 €
40.000 € 4.000 €
1995 2005 2010 2014
Cos
t nee
ded
to st
art a
n IT
com
pany
Technology Drivers
Open Source
Cloud + AWS
Developers Start Companies
99% cost reduction
0,2 0,4 0,8 4,3
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Cisco Amazon Microsoft LinkedIn Twitter facebook Alibaba
Private investor capture gains today
Previous Tech Cycle
Current market cap: $133B+ $261B+ $405B+
$15B+
$13B+
$307B+ $163B+
New Tech Cycle
Market Capitalization at IPO ($B) vs. current
*) Data from Q1 2016.
104 150
Companies see the Pre-IPO Dip Va
luat
ion
Time
Financing rounds
IPO (same for trade sales)
indicative
fb: $304bn
box: $1.39bn
sq: $3.37bn
+214%
-28%
-42%
Negative Outlook creates Impact
med
ium
.com
/@th
omas
gr
> www.medium.com/@thomasgr
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So the Markets have changed – and so did VCs.
Late stage financing produces lofty valuations
Seed Stage Early Stage Later Stage
Larger Later stage rounds after
validation
More seed rounds as costs decline & sources of capital increase
Traditional VC
Today’s VC
Valuation Better equity position for early stage investors and founders
competitive areas (Big funds needed)
… When a concept works the competition is fierce.
Private Investors have different Goals 500 Startups, Y Combinator
Seedcamp, Startupbootcamp @500: ca. 900 invests, 50 exits, 3 unicorns @seedc: 240 invests, 12 exits, 0 unicorns
Accel, Index, Bessemer, KPCB, Sequoia, A16Z, Fidelity, Highland, Kinevik, Global Founders, RI
IPOs, Unicorns, 1000+ investments
Salesforce, Intel, Samsung, SAP, Google Ventures
“The good, the bad, the ugly…”
Alphabet Capital, facebook, SoftBank, Elan Musk, ... “Big Bets on Moonshots”
Seed Stage Late stage
1x
8x
2x
na
Where business runs Everywhere on…
Telco's life in a complex World
Fast Secure ubiquitous
Networks
Telco’s Chance to benefit
Partnering & Venturing
Contents & Advertising
Social Networks
Security Platforms
Connected Computing
Opportunities of Venturing
Opportunities of Partnering
IoT & 5G Cyber / Privacy
Big Data Messaging
The way for Corporate Investors
• More corporations need to invest & partner
• Many bets on small ideas is good Marketing
• Big bets on “close to core” businesses need focus
• CVC funds are nice to have - but less efficient
• Investments from balance sheet is the way to go
Like Startups – VCs are risking to burn $$$ of LPs…
… but in CVC the Corporation will feel the impact!
Thomas Grota Twitter @thomasgr