There remains continued growth of corporate venturing as it enters mainstream acceptance by companies around the world as a tool to help their innovation framework. One of the clearest examples that corporate venturing is in its golden age was the buoyant numbers of delegates at the 14th Annual Corporate Venturing and Innovation Partnering conference presented by the International Business Forum in the US last month. The organisers had twice as many attendees than expected for the firstday’s corporate venturing workshops organised by Andrew Gaule, founder of consultancy Corven Networks. These workshops followed an opening discussion presented by Gaule and Robert Ackerman, founder and managing director of venture capital firm Allegis Capital, which specialises in working with corporations, about how to build a sustainable corporate venturing programme. This topic was picked up through the three-day event as the speakers looked at how to build in greater stability to an industry that Ackerman described as "volatile" over the previous 40 years. Ackerman said: "The pace of innovation has accelerated and become more global while the pressure to achieve more with less has only intensified and there has been a significant shift in value creation from large to small companies. "Small companies now make up 24% of research and development dollars compared with 4% in 1981, while large companies’ share has fallen from 70% to 37.6%. "The challenge large companies have in working with young companies is a cultural mismatch, and for corporate venturing to help with this impedance is mainly an issue of people – how to find, hold on to and compensate the best corporate venturers with support from the C-level of senior executives [such as chief executives (CEOs), chief innovation officers and chief financial officers (CFOs)]." Ackerman described the CFO as "one enemy" of corporate venturing because the unit’s returns were volatile and lacked predictability. As a result, he said corporate venturing units needed to spend time working on how to manage risks by getting more leverage and commitment from the corporation to the venturing unit and its investee companies and using portfolio theory to limit valuation volatility. Ackerman said one extra way of building "significant competitive advantage" for the parent beyond committing to venture capital funds or direct investing in entrepreneurs was to use the knowledge gained to help the internal mergers and acquisitions team buy and integrate deals. Gerald Brady, a managing director within US-based Silicon Valley Bank responsible for leading its entrepreneur services group and work with…
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Industry seeks an end to a ‘volatile’ history
Mar 7, 2012 • James Mawson
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