The most important factor in your ability to do well in a role is often beyond your own “ethics, aptitude and attitude”, as Marc Andreessen says, but hinges on whether your boss gives you the time and resources to do the job.
Corporate venturing as a profession faces the same challenge in this regard as any other, but it is one that CEOs increasingly care about, and I have included in the margins of these pages a selection of quotes from their managers, taken from some of the profiles.
The industry has to combine the challenges of all venture investors in deal-sourcing the best entrepreneur then backing her with all the support possible from the corporate parent. All the while navigating the strategic or financial considerations of a regularly-changing coterie of senior managers.
That so many corporate venturers have more than a decade’s track record leading their specific organisation signals what happens with talented leaders receive this long-term support. About a fifth of the GCV Powerlist have spent more than a decade in their role, with some, such as Pfizer’s Barbara Dalton, heading corporate venturing units since 1993.
A similar proportion (23) have been leaders between five and 10 years at their groups. However, nearly the same number again (16) have recently taken on this top job after the beginning of last year, so in the past 18 months. This means more than half have been in their current roles less than five years.
This, however, is better than most CEOs. Last year, nearly 17% of the world’s largest 2,500 public companies changed their CEO, the highest figure for the 16 years since Strategy&, a unit of PricewaterhouseCoopers, began tracking these numbers. Globally, the share of new CEO positions that were filled by women fell to 3% in 2015.
And, whereas nearly half the GCV Rising Stars were women, less than a fifth (18) were female GCV Powerlist members, although a number, such as Laurel Buckner at GCI, fell just outside. To give context for the broader venture industry, data provider Crunchbase said 7% of the partners, or 53 of 764, at the top 100 firms were women, and 38% of its top 100 firms had at least one female partner.
Regardless of gender or ethnicity screenings, all the Powerlist, and other venture investors, seem to subscribe to one basic attribute noted by George Davis, Qualcomm’s executive vice-president and chief financial officer at last year’s corporate venturing conference in California.
As Davis put it: “Your network is your net worth.”
A glance at how top firms in the Powerlist co-invest on deals, even where their parent organisations might be competitors, just scratches the surface. There is also a meta-overlay of insights drawn by corporate venturing units sharing insights with peers, from units set up by portfolio companies, such as Naspers with Tencent, Mail.ru and Movile, Qualcomm with Xiaomi, or International Data Group with most of China, and Silicon Valley Bank with most of California.
Even more pithily than Davis, the Chinese call the system of social networks and influential relationships that facilitate business and other dealings “guanxi”. It has been enormously valuable in the number of Chinese groups that have risen up the GCV Powerlist, now headed by Tencent’s Li – the first non-American to do so.
Charles Searle at Naspers, who leads its Tencent and Mail.ru relationships, said: “Tencent has a world-class M&A team that is super-smart and very experienced. If there is anything they have taken from Naspers it is to be flexible to take smaller, minority positions in businesses. This allows them to identify management teams in entrepreneurial companies with meaningful equity that can build and run larger ones.”
Having a board and senior management that understand first-hand the challenges of venture investing makes a big difference.
As Davis added in last year’s keynote with then Qualcomm Ventures head Nagraj Kashyap, corporate venturers have “a big job description”.
He added: “Only an idiot would want to do this job. To take on this makes you vulnerable at times because it is a very tall ask.”
The role of venture unit leader includes providing insights, helping the business units, influencing the wireless industry and delivering top-quartile financial returns, where the latter is a necessary but least important requirement, Davis said.
But while a corporate venturing leader’s role is naturally collaborative with venture peers, colleagues, corporate managers and entrepreneurs, it can be ultimately isolating, as any manager can testify.
However, it does not have to be. The New York Times in a recent article summed up the general environment for innovation capital well: “The venture capital industry is booming, especially in the technology space.
“Corporations are participating in this trend by establishing their own internal investment organisations. These corporate venture capitalists, also known as strategic investors or corporates, are investing in tech startups alongside traditional financial VCs. In fact, according to Global Corporate Venturing, over 48% of Fortune 100 companies have a corporate VC arm and these corporate VCs have participated in 24% of total deals globally for the past four years.”
To help with their guanxi and future cooperation and competition, this industry’s elite will meet for an invitation-only dinner at the Shard, Europe’s tallest building, on May 23, just ahead of the two-day Global Corporate Venturing Symposium at the Grange Hotel by St Paul’s Cathedral in London, UK.
Sponsored by GE Ventures, this dinner will hear from top-ranked corporate venturers – the private war stories of an elite group of investors managing more than $25bn. For their public insights, hear them at the symposium and read the rest of this GCV Powerlist 100 supplement, but as entrepreneur and investor Steve Case says in his new book – The Third Wave: An Entrepreneur’s Vision of the Future – “There is an African proverb that will define the third wave: If you want to go quickly, go alone, if you want to go far, go together.”
It is a message that will resonate with this network.
Methodology
For our May Symposium in London, Global Corporate Venturing runs its Powerlist of the top 100 heads of corporate venturing units out of the 1,400 or so globally that we cover.
The initial criteria involved excluding general partner-owned venture firms even if the majority of their commitments came from corporate limited partners, such as Norwest, backed by Wells Fargo, Global Brain, which manages a fund for KDDI, Iris Capital, similarly for Saudi Telecom, and Propel, which recently spun out from BBVA following a long lineage, including Scale Venture Partners out of Bank of America.
GCV uses a number of metrics for selecting the Powerlist, including the GCV Power Index, which looks at deals, exits and international perspective plus co-investor quality and other factors, from our GCV Analytics “insights as a service” data platform.
In addition, as editor-in-chief, I look for qualitative factors, such as thought leadership, vision and motivational abilities, including who from the team was one of our Rising Stars selected in January ahead of the Global Corporate Venturing & Innovation Summit in Sonoma, California.
To help in this selection, I looked at highlights from the past year and analysed plans for the year ahead, as well as calling for nominations from the CEO or venture unit’s boss, asking about their achievements and how ventures help the company’s innovation strategy and growth.
The differences between the GCV Power Index performance (see chart opposite) and their ultimate GCV Powerlist ranking comes when this qualitative overlay is applied, which helps explain why Jeffrey Li at Tencent is above Wendell Brooks at Intel Capital.
This Powerlist 100 is then categorised by ranking within the top 25, and the rest by alphabetical order. For the top 25, GCV Analytics has added to each profile the individual GCV Power Index rating for deal numbers, aggregate investment dollars for the rounds they have joined, exit values and volumes, number of countries their portfolio companies were in, sectors crossed, round numbers and co-investor quality.
The blue lines and the figures above them are maximum values investors have reached for each of the examined categories, according to GCV Analytics data.
To help improve this quantitive aspect, join Intel Capital, Qualcomm Ventures, BDMI and other subscribers in providing what public and private data you can. This will allow us to calibrate your ranking better in future.
It helps if this data is known internally and explained externally. To give one example, the website of one corporate venture reported: “We invest in North America, Europe, Israel and Asia-Pacific and manage over $1bn in committed capital and more than 40 portfolio companies.”
And from its 2015 annual report, page four: “[name redacted] manages over $750m in committed capital and currently holds investments in about 50 portfolio companies.”
On page 12 the same report added: “The fund’s total portfolio in 2015 consisted of 46 companies, which have decreased in numbers over the years.”
Its website listed 39 portfolio companies by name. How would you rank it?
