The world of how fast-growing entrepreneurs can gain the funding and support they need is changing as the traditional venture capital model reaches its pensionable age.
The world is transitioning to one where there are more corporate venturing units than independent venture capital firms and one where these corporate venturing units will have to lead more rounds, in more sectors and regions than ever before.
As so often has been the case in the development of corporate venturing to being the epitome of value-added investors, chip company Intel’s eponymous unit has been leading the way.
Its latest deals shows why. Intel Capital’s 10 deals announced at its Global Summit in California this week saw it invest in five countries and lead eight of the rounds.
The only two deals it took a supporting role were US-based secure content sharing platform Box’s $125m series E round led by private equity firm General Atlantic that closed in August, and Brazil-based electronics payment platform PagPop, which is also backed by angel investors such as Matt Coffin after incubation at 21212.
In total, Intel Capital invested $40m in the 10 investments, which were split geographically between the US, China, India, South Korea and Brazil.
In the US the other deals are for:
- social radio platform Jelli, which raised $9m in its B round led by Intel Capital and venture capital firm Relay Ventures, as well as First Round Capital and angel investors that backed the $7m A round in May 2010;
- mobile proximity platform NeuAer (also known as NewAer) founded by serial entrepreneur Dave Mathews; and
- cloud services provider Tier 3, which raised $10m in its B round led by Intel Capital, with participation from returning venture capital investors Ignition Capital and Madrona Venture Group that had previously provided $8.5m such its foundation in 2006;
In India:
- content distributor Hungama.com (formerly known as Virtual Marketing (India));
In China:
- integrated circuit design house FocalTech;
- three-dimension game developer Transmension Technology; and
- mobile advertising provider UUCun previously backed by Innobridge Venture Fund.
In South Korea:
- social game developer LIFO Interactive, which produces games such as Penguin Almighty and Olympic Games City and has been backed with $500,000 by local venture capital firm Stonebridge Capital in mid-2011;
A full review of the Intel Capital Global Summit will be in next month’s Global Corporate Venturing magazine but part of its success has come both from its strategy of continuing to invest during cyclical downturns – a strategy it uses for its chipmaking – but also its direct examination of failures for lessons.
As Arvind Sodhani, president of Intel Capital, said when asked about Clearwire, the group’s largest investment, strategic merits in the deal in promoting wifi does not prevent him looking at the lessons from its relative financial failure.
While Intel Capital remains an outlier for the industry in terms of size and sophistication of its operation as well as geographic dispersion, others are catching up. Google Ventures has reputedly backed 170 start-ups in the past two years while US-based drugs provider Merck has re-upped with a second $250m corporate venturing fund after two years of dealmaking, Qualcomm Ventures is active in multiple continents and a host of strategics are collaborating to create global investment platforms, such as Iris Capital – backed by mobile phone operator Orange and advertising agency Publicis – with teams now present in Silicon Valley and China as well as in France and the Middle East.
And, as this month’s Global Corporate Venturing magazine – out this week – reviews, even in the heart of venture capital, Silicon Valley, there are now more corporate venturers than independent firms that are members of the Western Association of Venture Capitalists (the first non-profit trade body for the industry in the world).
The world of how fast-growing entrepreneurs can gain the funding and support they need is changing as the traditional venture capital model reaches its pensionable age and judging by the Global Corporate Venturing LinkedIn community, it is the entrepreneurs rather than traditional venture capitalists who are realising this fastest.