One of the opening panels at the GCV Digital Forum last week covered the so-called triple helix of how corporations, governments and universities can work together. The groups prepared keynote presentations before a live discussion.
Elizabeth Boggs Davidsen, director of sustainable development goals (SDG) impact at United Nations Development Programme, the flagship initiative of the 17 goals adopted by all states for action by 2030, initially joined in 2018 to drive a new business model so the UN could mobilise the private sector.
She noted the aggregate increase in private wealth rose by $9.1 trillion to $360 trillion by mid-2019. Achieving the 17 SDGs was estimated to cost $5-7 trillion per year but even before the Covid-19 crisis there was a gap, she said.
Governments and others are providing $2.5 trillion per year so the private sector can definitely play a role. If we mobilise 5% of private assets this will more than meet the targets, but only if applied in the right ways.
Interviews find business leaders like the SDGs but are unsure how to apply them and have no market intelligence. There are no unifying standards for what constitutes an SDG-enabling investment, and a lack of intelligence, and so the UNDP is working on creating these this year.
Action is also being taken at a regional level, lead by the European Commission (EC).
Patrick Child, deputy director general at the EC, said €100bn of the budgeted €1.85 trillion total budget for the 2021-2027 period was for innovation under the Horizon Europe plans.
This €100bn is being targeted in three areas: European Research Council for research and development, global challenges and industrial competitiveness, and innovation more broadly, particularly the European Innovation Council with its pathfinder (grants), accelerator (blended equity, grants and debt) and advice and support.
More broadly, the EC has set out its so-called Green Deal as a commitment for the continent to be carbon neutral by 2050 by changing emissions from energy, land, agriculture, cities and mobility. This green growth agenda accounts for 35% of the Horizon Europe budget over the next seven years.
Child said: “It is a great moment [to be] working in partnership with EU.”
Shiva Dustdar, head of innovation advisory at the European Investment Bank – the so-called climate bank as all activities by the end of 2020 are Paris aligned – added that it was a great opportunity to bring in a green and digital agenda as part of the recovery and finance, especially in new innovation areas. Hydrogen is a big theme and critical sectors in digital, eg. quantum, AI, blockchain, space and similar sectors, are highly interconnected. The EIB is taking a broader approach to connect the dots and bring patient capital in.
“Where the corporate venture community plays an increasingly important role [is to be] closer to science and be an important anchor investor.”
The EIB wants “corporates to see we are in this together and the current crisis and greater awareness of climate needs a common language …. Our mission is to mobilise large pools of institutional capital to bring scale. Bring trillions to our billions of public support.”
Jim Wilkinson, interim CEO of Oxford Sciences Innovation, said its own five years of bringing patient capital to the world’s number one university for research globally had shown what could be achieved. Oxford has had 70 spinouts over past four years compared to an average of five per year beforehand, and OSI with £600m and a 78-strong portfolio (31 as lead investor) has brought in strategic co-investors.
Jon Lauckner, president of General Motors’ corporate venturing unit, GM Ventures, which started in July 2010, said it started out of the last global financial crisis with an idea to do things differently. The focus was on innovation and technology with startups, not just the company and its suppliers.
He added that GM Ventures had a good approach to startups: make direct investments with a stage-and-sector agnostic approach and follow on with an upper limit of 20% of equity.
“We want access and to commercialise tech, not run the company. We intend to use and be a customer to portfolio companies. That’s the benefit a corporate investor brings to startups and other investors. All startups’ common problem is to identify their first customer. GM does not buy small quantities of anything. We, by ourselves, drive meaningful revenues and profits, and as an investor (look to) get them to the end.”
Lauckner noted that CVC is now very different from when he started the unit as the first automotive CVC vehicle. CVCs in total invested about $7bn in 2010 and that has grown tenfold to about $70bn per year. GM Ventures had planned to invest $100m and has now invested more than three times that amount, across 130 rounds for 48 separate companies.
An amazing number of portfolio companies acquired (16) has returned a lot of capital to GM, which is certainly appreciated and makes the whole proposition one they can get behind as an evergreen. More importantly, Lauckner, said “We have industry-first tech implemented in GM and that makes a big difference in how people view taking the risk of working with startups.”
The past decade shows how the venture ecosystem has changed but also provides a clear roadmap to what the future will bring.
