Telefonica Ventures looks to open future

It is always interesting to see how groups put together the pieces of a jigsaw, when they change their structure as to how they invest in innovation. It was fascinating to catch up at press time with Jack Leeney, the Silicon Valley-lead for Telefonica Ventures, the corporate venturing unit of the Spain-based telecoms company. Leeney has been overseeing that corporate venturing unit’s move to Telefonica’s OpenFuture division, away from the group’s Telefonica Digital division.

Telefonica had been fairly active after it was set up by Telefonica following its acquisition of over-the-top company Jajah, which gave the group a presence in Silicon Valley – and now the group is looking for further bold opportunities in a different part of Telefonica.

Leeney, when I spoke with him, was enthused about two investments highly strategic to Telefonica that it had lined up, which have been announced in the last month. It joined the $115m investment for France-based internet of things company Sigfox, and it also backed the $80m series C round for operating system company Cyanogen, also backed by Twitter Ventures, Qualcomm Ventures and Rupert Murdoch, as well as other strategics like new investor Smartfren Telecom, an Indonesian operator, and Tencent, which had invested in the series B.

This latter deal had Leeney very excited. Cyanogen has grown to more than 50 million active users world-wide, marking a large growth trajectory on limited venture funding, with $30m raised prior to the latest round. This user base easily explains the eye-catching names in its syndicate, with the deal marking Twitter’s first public corporate venturing investment and it being a rare public disclosure of a personal investment by the head and owner of News Corporation, which also make venture investments.

Leeney said the business reminded him of open source software developer Red Hat in its early days. Cyanogen has detailed extensively how it wants to bring further competition to the operating system market, which at present is dominated by Google’s Android with Apple dominating the high-end market. The competition brought about by Cyanogen should in theory allow telecoms companies and handset manufacturers to capture a greater share of the economics from the use of applications, which at present is largely captured by Google and Apple.

Telefonica is now also hatching plans to invest in private equity-style deals, and is spreading its wings in a multi-stranded venture capital and open innovation programme. These activities also include Wayra, which is a multi-stranded accelerator active across countries where Telefonica has a presence, and Amerigo, a fund-of-funds which backs venture firms in these countries. Open Future itself is reaching out to communities of entrepreneurs and universities and governments in a widespread open innovation effort, marking a highly interconnected innovation and venturing strategy. With a significant venturing operation and once the private equity plans are underway, it will be highly interesting to see how the group pulls together its various strategies together to create value. The bold bet on Cyanogen indicates the group will likely be ambitious in its wider efforts.

This issue

We hope you enjoy our April issue. This month Andrew Gaule has caught up with Geoff McGrath, of McLaren Applied Technologies – Gaule’s previous interview with McGrath has been one of the most read articles Global Corporate Venturing has published, so we expect readers to also flock to this piece.

In our consumer sector feature, Global Corporate Venturing has caught up for the first time with Rakuten Ventures’ corporate venturing head Saemin Ahn, while SVB details a survey it has put together on the innovation economy.

The pieces are also falling in place for our fifth Global Corporate Venturing Symposium on June 2 and 3, which looks set to be our biggest yet with approaching 400 people. We will be hearing from speakers like Sir George Buckley, former chief executive of 3M, and Claudia Fan Munce, head of IBM Venture Capital, who also chairs our editorial advisory board.

Global Corporate Venturing is also fleshing out a plan to improve our data analytic capabilities and we will be able to reveal more shortly about what we are doing.