Introduction to the GCV Powerlist 2021 by James Mawson, editor-in-chief, Global Corporate Venturing
At the time of writing this editorial for the GCV Powerlist 2021, we are 40 years from asking the last question.
Author Isaac Azimov’s favourite short story was to reverse engineer a creation myth; effectively to ask how the universe might have started by imaging how an analogue computer could advance enough to tackle entropy.
The question was asked 21 May 2061 in Azimov’s story, The Last Question, but after the past 18 months tackling the covid-19 disease and fears about climate change and potential wars some could be forgiven for asking what the most important questions we should be tackling sooner than that.
Fortunately, the world has proved resilient to the challenges and there is hope that by asking the right questions and letting a plurality of views try answering them then the innovations at scale can come forth to meet the concerns.
Ultimately, it is relatively small numbers of people who decide. The Pareto principle applies that 80% of the consequences come from 20% of the causes.
The GCV Powerlist is designed to uncover these “vital few”. These 100 ultimately are responsible for tens and hundreds of billions of dollars invested in the entrepreneurs who turn the ideas into products and services that can lead to messenger RNA for vaccines against covid-19, quantum computing that could help unlock the mysteries of the universe (or just some tricky maths for cybersecurity), and even new energy sources from nuclear fusion.
But these five score of men and women from around the world also bring the power of their parent companies to bear to scale up the prototypes and pilots into something we can all use or benefit from.
The world is what we invest in. And, finally, more is going to make the world a better place.
Bond issuance by investment-grade-rated American companies jumped to a record $1.7trn in 2020, up from $1.1trn in 2019, according to S&P Global Market Intelligence, a research outfit.
Throw in more than $230bn in US corporate equity issuance in the 12 months to April, according to Yardeni Research, and it is no surprise to see an increase in cash held by non-financial firms in the S&P 500 index to almost $1.5 trillion from about $900bn in 2019, according to Bloomberg. And this cash is starting to flow to the right places, according to Economist analysis in its end-May issue.
“Forecasters reckon that overall real investment worldwide will soon be a fifth higher than it was before the pandemic.” The US’s business investment is rising at an annual rate of 15%, while analysts at investment bank Morgan Stanley predicted a “red-hot capex cycle” with global capital expenditure soaring to 121% of pre-recession levels by the end of 2022 (see chart 1 below).
By 2022 companies in the S&P 500 are forecast to be spending over a tenth more on factories, technology, research and development (R&D) and intangibles, led by the technology firms that accounted for a third of R&D last year, according to the Economist.
Apple will invest $430bn in the US over a five-year period, an upgrade of 20% on previous plans; Taiwan’s TSMC, the world’s largest semiconductor-maker, recently announced that it would invest $100bn over the next three years in manufacturing; and analysts said Samsung’s capex would rise by 13% this year, having gone up by 45% in 2020.
This is to tap expected pent-up consumer demand.
In America real disposable income per person is 27% higher than it was in February 2020.
As a result, high-street retailers, restaurants and consultancies are also investing in innovation. Not everyone, however, is boosting capex. The Economist’s analysis suggests that about half of the companies, such as oil and gas groups, airlines, miners and industrials, in the S&P 500 are not expected to invest more in 2021 than they did in 2019.
But below the surface and it is possible to see more seismic shifts in where these innovation budgets are being spent. Oil and gas groups might be trimming their collective capex budgets by about 10% this year but they are looking to corporate venturing to make more impact.
As one US-based, global head said: “We received a bit more budget to really do some ‘wildcats’ so that we are not just helping [X] to deliver its new strategy but helping inform its future strategy as well. All really great stuff.”
As the Economist recognised: “Investment in new technologies and business practices is the secret sauce behind higher living standards. Weak capital spending contributed to the rich world’s sluggish productivity and growth in the 2010s, and to the gnawing sense that capitalism was misfiring.”
Now, while the 2020s is seen as the decade whether we can avert irreversible damage to the climate, our health and other fauna and flora and the environment, this generational challenge is coinciding with unprecedented sums of money available and a new spirit of belief.
Through responsible innovation meeting enough capital, we can deliver on the potential to make the world a better place.
Thank you to all the Powerlist and your peers from more than 4,000 corporations investing either directly or indirectly in startups. My thanks especially to my colleague, Liwen-Edison Fu, for the profiles and managing the supplement.
About the Powerlist selection process and methodology
GCV compiles its annual Powerlist of the top 100 heads of corporate venturing units out of more than 2,000 that we cover globally. We use a series of metrics to select the list, which draws on our GCV Analytics insights-as-a-service data platform.
In addition, we look for strategic and leadership measures, such as thought-leadership, vision and motivational abilities, including who from the team was part of our Rising Stars and Emerging Leaders awards selected in January at our GCV Digital Forum 3.0 in February.
Some of the strategic and leadership measures we look out for include:
- Any examples of strategic collaborations with portfolio or venture-backed companies
- Business unit partnerships and development with portfolio companies
- Product or strategy road maps and public leadership positions in conferences, associations and societies
- Team members included in GCV Rising Stars & Emerging Leaders and other industry awards
- Team expansion and recent promotions.
About Global Corporate Venturing
GCV is the media publication and data provider for the corporate venture capital industry. It has a unique database, GCV Analytics, to which many Fortune 1000 companies subscribe, and it runs multiple global events, with flagship conferences in Silicon Valley and London.