GCVI Summit – day 1 report

The third annual Global Corporate Venturing and Innovation (GCVI) Summit hit a new record high this year, with close to 700 attendees from 350 companies with aggregate annual revenues of $6 trillion and nearly $200bn in venture assets under management gathered for the two-day event in Monterey, California.  

“The pace of change will never be as slow as it is today.” Such were the words of Sue Siegel, chief innovation officer (CIO) at GE and CEO of GE Ventures, who is co-chair of the GCVI Summit, as she opened the conference on Wednesday.

“Change is going so fast,” she added. “If you think of it, today is as slow as it is going to get; in the future, you will see the current time as slow, which means things are only going to accelerate – which is a scary perspective!

“We already feel how tumultuous everything is, and how we struggle to keep up with all of technologies. And yet things are only going to get faster.

“What this means from a CVC [corporate venture capital] point of view, is that we cannot get complacent. We need to continue challenging ourselves.” 

Referring to last year’s summit, Siegel also reminded the audience of the “VUCA” (referring to a volatile, uncertain, complex and ambiguous environment) and the “great reset” that was set to hit the world in 2017 as a direct context of the political context.

She said: “Last year, Brexit had happened, the US elections had happened, and the French presidential elections were underway, which meant there was a lot of political tension. There was so much going on at that time that no one quite knew what to expect. 

“We all thought – in 12 months, it will have all settled down. And as it appears, it has not! In fact, what you see at the moment are natural disasters, cultural movements (such as the #metoo movement), new technologies such AI [artificial intelligence], cryptocurrencies, blockchain and autonomy, which are all disrupting the industry.

“And alongside this, you have geopolitical uncertainty. So as much as we all thought that 2018 would bring more stability and clarity, I am not sure we can say this now, as there is still so much that is unsettled – politically, culturally, and technologically.

Siegel, however, was confident that CVCs were “pretty well-equipped” to deal with this instability as, in her words, “the venture capital personality and mindset is one that lives in ambiguity, one that looks to find solutions to problems, and one that sees how ambiguity causes opportunity.”

She said:  “CVCs are very well-positioned in terms of being able to solve a problem through entrepreneurship and partnership, but also to help the strategies of corporations. It is very important that we keep on bringing freshness, novelty and the ability to question in order to challenge the “accepted way.

“When you have corporations impacting industries, and industries impacting the world in turn, it becomes a pretty big deal.”

As a result, she said CVC was a “discipline” becoming more necessary as research and development budgets shrink and productivity looked for. GE was using ventures and innovation tools to find novel concepts, catalyse growth and scaling impact and changing mindsets.

Siegel described the community as “heroes of impact” and CVC as “true drivers of innovation”. But one that requires people to stand up and take responsibility, share best practices and learn from one another as well as engage on diversity by men asking questions and women sharing understanding.

After Siegel, Wendell Brooks, Intel Capital’s president, gave an update on the firm’s activity in the two years since he took over and focused on where it was adding value to portfolio companies and changing the focus of activity with an emphasis on diversity.

With 42 new investments last year, Intel invested $690m compared to the $455m in 2016’s 34 new deals with a particular focus on automation (drones, robots, vehicles) as well as artificial intelligence (AI). 

Ten of Intel’s portfolio companies were introduced into the public market in 2017 – a significant step up for the unit, which was helped by favourable market conditions, Brooks said, while another 26 exited through trade sales.

Its latest investment initiatives have seen the number of women-led portfolio companies in new deals increase from 6% in 2015 to 15% in 2016 and 22% last year.

Brooks said: “When I was on this stage two years ago, I made the promise that Intel would commit to diversity. “Looking at the audience here, it seems we are doing better than in the financial VC community, but it still is not enough.” 

Referencing its own new internship scheme, the president challenged all CVCs present in the audience to look hire or intern at least one African American and one woman, stating that this would “already be a big contribution to the community.”

He added that the group had tasked Lee Sessions and Bryan Wolf to find increasing ways to “work together” with other CVCs to support portfolio companies and make “one plus one equal five”. He said CVCs’ advantages [over financial VCs] include due diligence, industry expertise, refine technology with engineering, endorse technology and drive standards, accelerate route to market and drive company thesis.

And while warning for groups to be prepared for recession and to take advantage of opportunities created when capital is pulled back from VCs in a downturn, he added: “Intel Capital’s mission is to invest around what our business units are doing, but also to make sure that any new opportunities and technologies we invest in are helping us learn. 

“We are getting paid to learn, and to invest into wherever we think innovation is going.”

A third highlight of the first morning session was the keynote presentation given by Young Sohn, president and chief strategy officer (CSO) at Samsung Electronics, a unit of the South Korea-baseed conglomerate, in which he delivered a key message: “Data will drive opportunities for everyone.”

Comparing the explosion of data economy to the oil boom that drove much of the 20th century, Sohn said: “data is the new oil”. The CSO said we were in the middle of “a big change”, with a lot of opportunities emerging in the data space. According to him, the top five data companies currently have a combined market value approaching $3 trillion compared to about $1 trillion for the top five oil majors.

He added: “All the things we do nowadays are happening with connected devices. One of my jobs has been to change Samsung from “old” to “new”, and to figure out how to embrace this change.”

Last year, Samsung Electronics had $223bn of annual sales, and employs 308,000 employees in 79 countries. The firm’s CVC unit focuses at once on extending the competitive edge of its current areas of activity, which includes device solutions, IT and mobile communications, and consumer electronics, as well as on creating new opportunities in line with the new data economy era.

“Data is going to be critical, and it is going to affect all of us,” Sohn added, forecasting that data activity would be at 160 zettabytes by 2025 compared to 20 last year with cars a big factor in the growth.

A recurring theme throughout the matinee and afternoon sessions, was the change in mindset and approach regarding the investor-entrepreneur relationship, with the need to participate to the global community of entrepreneurs for CVCs.

Several panelists were keen to highlight the need to encourage collaboration among CVCs. Jacqueline LeSage Krause, managing director at Munich Re / HSB Ventures, said: “As the industry is becoming more professionalised, there is increased interest in sharing knowledge on particular issues and establishing common practices.”

Giving an update on the newly-formed GCV Leadership Society accounting and operations taskforce she added: “What we realised is, whether you are a new CVC or have been in the industry for a long time, we are all coming across the same issues. Rather than tackling them on our own and as if it was the first time these were faced, we thought it made sense to get this small taskforce together and establish common approaches to address them.” 

This was one of several groups or hubs formed under the GCV Leadership Society to allow the industry to better tackle its issues, while a separate session for government venturing leaders met and the University of California, the country’s largest public research insititution with 1.8 million living alumni/ae showcased five of its entrepreneurial stars. 

The prior day’s Women in Venture lunch, organised by Silicon Valley Bank and law firm Fenwick & West, had developed the networking opportunities to encourage women to mentor each other and provide support.

As GCV founder and editor James Mawson reminded the audience later on in the first day of the Summit, following the prior night’s GCV Rising Stars awards diner, “it’s about the people”.

A general sense of collaboration and mutual help should always be encouraged as the venture ecosystem shifts from local, capital-plus-advice model to international, diverse syndicates able to meet the entrepreneurs’ five core challenges of capital, customers, product development, hiring and, eventually, an exit.