GCV Symposium 2019: Day Two

The second day of the ninth annual Global Corporate Venturing Symposium kicked off in London with opening remarks from Mawsonia’s founder and editor-in-chief, James Mawson, and Thierry Heles, editor of Global University Venturing.

Josemaria Siota, director of research at the Spain-based IESE Business School, moderated the first panel of the day, referencing an article he had written outlining the seven lies of corporate venturing.

Julie Kainz, an investor at Salesforce Ventures, enterprise software producer Salesforce’s corporate venture capital (CVC) unit, and Marc Rennard, president of Orange Digital Ventures, telecommunications firm Orange’s investment arm, joined Siota on stage to discuss how CVC units can manage their autonomy.

Kainz told the audience that because customer success was the main concern for both Salesforce and Salesforce Ventures, having a common goal helped the unit “know our position as a venture fund”.

Having been in a similar position, Rennard said the CVC’s role is to facilitate the relationship between the startups and the large group, adding: “We are not forced to invest in companies just because of commercial relationships with Orange.”

Mark Muth, director of corporate venturing at auditing and consulting firm PwC, moderated the next panel of the day, which focused on how direct investments in companies differed in strategic terms to indirect investing as a limited partner.

Muth was joined by Jacqueline LeSage Krause, managing director of reinsurance firm Munich Re’s Munich Re/HSB Ventures unit; Bernhard Mohr, managing director of Evonik Venture Capital, a subsidiary of chemical producer Evonik Industries; and Jeanne Bolger, vice-president of venture investments at CVC unit Johnson & Johnson Innovation – JJDC.

Bolger said indirect investments had yielded mixed results for Johnson & Johnson, while Mohr said investing in funds had constituted a useful learning and deal flow-generating tool in the early days of the fund he manages.

LeSage-Krause noted there are opportunities in that area that could be valuable to a corporate investor, but remained skeptical about the value of investing in traditional funds to learn and enhance deal flow.

On the next panel, Mark Wilson, principal at commercialisation consultancy Strategic Technology Bioconsulting, told attendees that CVCs are increasingly adopting hybrid fund models.

The moderator noted that the hybrid structure is particularly emerging from large pharmaceutical companies engaging with independent VC groups, saying: “In many of these structures experimentation seems to be the dominant design and is used to bring together a vision of finance and decision making.”

Shiva Dustdar, head of innovation finance advisory at European Investment Bank (EIB), suggested that one of the key points is how CVCs units and angel investors can come into these hybrid structures. Peter Cowley, president of European Business Angel Network, had previously set up a small corporate venturing unit for an engineering company called Marshall, and suggested his main concern is possible misunderstandings between parties.

Later in the day, Gerald Schumann, partner at law firm DLA Piper, moderated a panel on balancing the differing interests of stakeholders in multi-corporate venture capital funds.

Dominique Mégret, head of Swisscom Ventures, the corporate venturing arm of telecommunications firm Swisscom, and Andrew Hinkly, managing partner of AP Ventures, the VC firm originally co-anchored by mining company Anglo American Platinum, also took part in the discussion.

Hinkly said that where purely strategic situations arose for profit-led VC funds with corporate backing, the best approach was to communicate the decision-making process to investors. Mégret added that it was crucial for a unit to find the correct balance between keeping contact with its parent company and maintaining independence from the corporate’s central financial motives.

The panel also included Samuli Sirén, founder and managing director of VC firm Redstone Capital, who spoke about why it made sense to work with corporates through VC funds to aid with the process of amassing a portfolio with strategic value.

Trond Undheim, partner at VC firm Vidian Ventures, moderated the next discussion, which centred on the future of work and the role artificial intelligence (AI) will play.

Paul Jacquin, managing partner at Randstad Innovation Fund, an investment vehicle for human resources firm Randstad, said the easiest way to get to grips with the future of work is simply to hire millennials. He also suggested that the future of work requires skills which should be assessed by using AI to make hiring decisions based on data.

Leo Clancy, head of technology, consumer and business services at foreign investment agency IDA Ireland, agreed that millennials have more skin in the game and went on to say that Ireland has to focus on retraining and staying agile as a solution to concerns about whether policy could keep up given the pace and extent of AI implementation. Bo Ilsoe, managing partner at NGP Capital, the VC firm spun off from communications technology provider Nokia, also pointed to AI success stories from around Europe.

In a fireside chat, Jeffrey Li, managing partner of Tencent Investment, a subsidiary of China-based internet group Tencent, explained that rather than acquiring or investing in companies as a ‘get rich quick scheme’, Tencent is trying to build an ecosystem of strong, long-lasting partnerships.

Li told Michael Redding, managing director at Accenture Investments, an investment vehicle for consulting firm Accenture: “We are creating an ecosystem because whether it is gaming or mobile payments, we cannot run these business ourselves – it just not in our DNA. That is the way we provide the best service to the end user.”

When asked his view on the which areas of technology he thinks are ripe for investment, Li said technology is a combination of personnel and capital. He also took note of the huge potential in retail, in particular the convergence between offline and online experience.

Kaloyan Andonov, a reporter and analyst for GCV Analytics, then presented data showing that since 2011, deal sizes in corporate-backed rounds have risen in median size across the board from seed-stage to series E and beyond.

Martin Haemmig, an adjunct professor at the Technical Centre for Mechanical Industry and the Glorad Center for Global R&D and Innovation, took the reins and displayed data identifying China as the biggest destination for investment flowing out of the US, with 83 deals representing approximately 15% of the overall total. He also highlighted CVC’s performance advantage over institutional VC-backed businesses according to certain metrics.

Thierry Heles moderated the next panel of the day, speaking to professionals from four fusion energy technology companies to gauge the challenges involved in scaling a breakthrough technology.

Klaas de Boer, managing director at General Fusion, joined Nicholas Hawker and Jonathan Carling, CEOs of First Light Fusion and Tokamak Energy respectively, and Jim Wilkinson, chief financial officer of university venture fund Oxford Sciences Innovation, on the panel.

When questioned on the advantages and disadvantages of the private sector, Boer said that although technology moves quickly at a multinational institution, it often stalls in between stages. He also suggested the nimbleness of the private sector is preferable to the public sector.

Carling added that competition in the private sector is also good, while Wilkinson said: “Governments should be underwriting these projects. It is not the easiest route but that is the most feasible.”

Attention then turned back to AI and how the technology can help corporate venturers improve their deal pipeline and unearth investments at scale. Roberto Bonanzinga, co-founder and investment partner of venture capital firm InReach Ventures, told James Mawson the biggest asset a firm has is data and not the amount of cash they have on hand.

“For me I am surprised by how little people are talking about it because that is where corporate venturing should be leading in terms of innovation,” Bonanzinga said.

Mawson closed out the final day of the GCV Symposium by moderating a discussion on the impact financial technology developers are having on incumbent banks.

Dominic Maffei, financial markets and UK lead of SC Ventures, the open innovation arm of financial services firm Standard Chartered, and Erica Young, director of venture capital and advisory firm Anthemis Group, agreed that there was not yet significant disruption of existing financial institutions.

Young said disruption is hard, in part due to the size of banks’ balance sheets and existing regulations, but that she is excited about embedded finance, where financial instruments move from a vertical to a horizontal structure, and compared it to computing.