GCV December 2020 issue editorial by James Mawson, editor in chief, Global Corporate Venturing
Unprecedented has been a much-used word this year as the implications of the covid-19 pandemic have affected seemingly all parts of the global economy and society.
Even those countries, such as Taiwan and New Zealand, that have managed the health issues from the disease well have done so with travel restrictions and shutting down parts of the economy for varying lengths of time.
The need to keep people healthy as a first-order priority has been a reminder of the hierarchy of needs. But while the impressive leaps in the technology and entrepreneurial innovation at startups, universities and research labs required to manage and then vaccinate against covid-19 have been put in place, the apparently limitless appetite for venture capital and change has remained.
This is perhaps surprising given venture’s prior history as a pro-cyclical industry where fewer funds are raised and deals done the moment an economic downturn hits.
This time, however, despite a terrible shock to the global economy, venture has remained resilient.
Dealmaking has remained robust while VC funds raised a total of $69.1bn by late November in the US, beating the record set in the full 12 months of 2018 of $67.8bn, according to PitchBook.
The industry has finally started to scale up as the strategic imperative to understand innovation has become clear. Whether direct investment or indirect as limited partners in VC funds, the non-traditional investors, such as corporations, governments, universities and family offices, have been robust in seeking strategic as well as financial returns and using the downturn to lean into the opportunities using a growth rather than fixed mindset.
Covid, while a tragedy, is one challenge. The Global Corporate Venturing annual survey of about 200 CVCs identified common technology issues from the past year, including covid and working from home, sustainable development and the energy transition to net-zero carbon emissions and information and communication technology innovations. (Next month will see their predictions for the tech issues for 2021 and both sets will be included in the World of Corporate Venturing report published at the GCV Digital Forum 3.0 on January 27.)
The latest quarterly report on artificial intelligence (AI) looks at the ethical issues from the technology. The growth in venture investing in AI technologies has already influenced geopolitics. The US and China are weaponising investment and trade flows in this strategic area of development.
Young Sohn, president and chief strategy officer of Samsung Electronics and chairman of the GCV Leadership Society, identified the “four Cs” of China, consumer, cybersecurity and the cloud as the disruptive issues for the industry to be mindful of.
As The Economist noted in its lead article last month on the rise of technopolitics, the rise of cloud computing as “the first a truly global infrastructure” and AI as “its most important application” promises significant change and opportunities.
It added: “More and more value is created by using oodles of computing power to extract AI models from digital information generated by people, machines and sensors.
“The models can then be turned into all sorts of services. Transport, health care, teaching, campaigning, warfare – these parts of society will not become ‘data-driven’ as fast as many predict, but in time they will all be transformed.
“Whoever controls the digital flows involved can divert much of the rent they generate. Knowledge is power in the virtual world even more than in the real one – and it generates profit.”
Investors have long recognised this symbiotic relationship, which is why there is nothing unprecedented in the feteing of the wielders of innovation capital.
