July-August 2021 issue editorial by James Mawson, editor-in-chief, Global Corporate Venturing
In filing his data analytics report (read here), Kaloyan Andonov described it as showing “a lot of positive momentum.
“It even feels a bit frothy.”
That is some understatement. The first half of the year had a total of 2,288 deals with an estimated total capital of $131.78bn, according to GCV Analytics.
That value, involving at least one corporate venturer, is more than the whole of last year and almost at the all-time record of $134bn in 3,232 deals posted in 2019.
Global venture capital funding in the first half of 2021 shattered records as more than $288bn was invested worldwide, according to data provider Crunchbase.
The effective equality between public and private capital markets, therefore, is almost complete. Allied to widespread understanding and acceptance of open innovation and it is little surprise corporates, along with hedge and mutual funds, institutional and family investors and traditional or specialised VC funds, can provide as much capital as public markets while the rotation on and off stock exchanges has been made much easier through the use of special purpose acquisition companies and direct listings and back into private hands through leveraged buyouts.
US initial public offerings have already totalled $171bn, passing the 2020 record of $168bn, according to data from Dealogic, published by Reuters, while global mergers and acquisitions was a record $2.4 trillion in H1, up 158% from the same period last year, according to Refinitiv Deals Intelligence.
Once capital markets have caught up with a more efficient allocation of resources to the entrepreneurs and managers who can best use it, what comes next? Looking at first principles can help. Low interest rates and monetary stimulus pushes more people into a risk-on position to find returns. This is adding the froth to venture investing, but the drivers of innovation remain in place, as advances in sectors feed off each other and impact other sectors around the world.
This is not a linear process but more exponential and now the capital is increasingly abundant to fund the innovations.
While corporate venture capitalists (CVCs) are increasingly professional – shown by the leaders’ support for the GCV Institute this year – there remains a slight sense too many are yet to weaponise their advantages to take their rightful share of rounds and drive company building. Having spent so long trying to improve their reputation with entrepreneurs and syndicate partners, it is natural many experienced corporate venturers are cautious about coming over as too hard-edged in negotiations.
This form of competition and collaboration is refined and hence fragile if communication fails.
Global Corporate Venturing’s sector councils covering health, finance, energy and artificial intelligence and deep tech, with others to come around mobility and industry 4.0, are designed to support this communication and hence efficient allocation of capital. They are also intended to build off a common language and best practices shared by CVCs for CVCs, through GCV’s training institute, reports and events.
This work is thanks to the community’s support and leadership in the innovation capital ecosystem. Increasingly, it means working with and is welcomed by independent VCs looking for corporate limited partners and the added-value CVCs can bring.
We will recognise these leaders in the GCV Powerlist published on 21 July as part of our Digital Forum that runs to 28 July. We will return to live and hybrid events from September, starting at the GCVI Summit in California before moving to Brazil, the UK, Florida and Asia.
There will be plenty to talk about.
