It is hard for corporate venturing groups to shake off the culture of their parent, even if part of the purpose of setting it up was to help change the corporation’s perspective towards innovation from whatever source it presents itself.
But as innovation globalises so corporations’ regional roots become less important than the cultural ones of entrepreneurialism and conservatism.
Last month’s editorial on whether the factors underpinning the rapid growth of the industry to nearly 750 firms over the past two years led to a wave of feedback on how fear and greed had shaped corporate venturing groups’ own ambitions and structure.
Behavioural finance research at places such as Cambridge University has thrown up how testosterone released from successful bets influences future investment decisions.
The confidence successful entrepreneurs seem to gain from their business seems to encourage them to be bolder and more ambitious with their venturing units – in terms of size of programme and team and remit.
This month’s profile of Google Ventures seems to be a case in point. The parent company’s phenomenal success over the past decade, since its potential acquisition by AOL fell through in the 1990s, has allowed the company to dream big in multiple areas, including buying and operating the Android mobile phone operating system.
Rich Miner, one of the brains behind Android, has also been one of the founding principals of phone operator Orange’s ventures arm.
Miner’s 19 public investments over the past three years makes him one of the most active dealmakers in venture capital – outside some of the spray-and-pray angels – and responsible for nearly a fifth of Google Ventures’ more than 100 companies in this period.
As Google shook up the media world, so Google Ventures says it wants to be a “radically different kind of venture fund” and shake up entrepreneurial investing.
Many of these “radical” corporate venturing units, such as Tencent in China, are also notable for having experienced venture capital first-hand. Having seen what venture capital firms (VCs) bring, and their areas of weakness, entrepreneurial corporations are setting up their own investment operations even earlier in their lifecycles as a way of avoiding being passed over by the next generation of start-ups or to fuel future growth.
By offering expertise in areas that traditional VCs lack, and being modelled in ways that have allowed corporations to scale, such as through having defined roles and specialisations, these modern corporate venturing units offer a service and professionalism above just commoditised capital, experience and a contacts book. In this light, Intel Capital remains the benchmark for what a venturing unit can achieve.
These corporate venturing units can also complementsenior executives from the parent company’s personal venture investments. This month, for example, Google Ventures said it had joined Google’s chairman, Eric Schmidt, in a syndicate backing Shape Security.
The changing dynamics of the venture industry, as traditional VCs shrink in number, means even corporate venturing groups that relied on them to find deals and complement internal research and development are having to adapt.
IBM set up IBM Venture Capital Group at the turn of the millennium to leverage the money committed to VCs rather than invest directly, but in the past few years it has reaped tremendous rewards from trying to support entrepreneurs more directly through its SmartCamps and ties with universities.
By contrast, venturing units set up with modest remits and by staid corporations ruled by fear risk mediocre returns or are shortlived, regardless of the calibre of the people who operate them.
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