Summer breaks (for readers in the northern hemisphere) are a good opportunity to reflect and do something different, the human equivalent of switching the computer off and on again.
It feels a good time to have done so as market noise to signal seems higher than ever in terms of uncertainty about the future, even as the underlying major global economies, such as Germany’s, soften with talk of trade wars and geopolitical shocks. The overall economy remains important to corporate venturing as its history has been one of expansion in good times and shrinking in poor ones.
Signals in venture capital also seem mixed. Fewer large deals in China has affected deal values in the first half of the year, according to GCV Analytics. This downturn was partly offset by expansion in other parts of the world, such as Latin America and Japan – both sites of our next continental events, Corporate Venture in Brasil and the GCV Asia Congress – but the US continues to drive the innovation capital ecosystem in many ways. Any economic slowdown there or impact from political cutting of venture capital inward investment of through the Committee of Foreign Investment in the United States will capture people’s attention.
We are delighted to be partnering the trade associations in all these countries, the National Venture Capital Association in the US, the Japan Venture Capital Association and ABVCAP in Brasil, in our next annual Global Corporate Venturing survey. Their analysis of regional out of global trends and ability to reach politicians could be vital to ensuring decisions are taken using data and insight rather than fear and supposition.
The results will be shared in the World of Corporate Venturing at the GCVI Summit in Monterey to an audience of more than 800 corporate venturing leaders, plus their rising stars and selected portfolio companies matched with corporations through the GCV Connect algorithm. The annual review will also sift through the data on deals, funds and exits over the past year and put into context the unprecedented growth of the innovation ecosystem as this decade finishes.
But while the data provides the experiential, the survey remains the best way to get into the minds of the corporate venturers themselves. However, it remains only a snapshot of organisation structure and team management rather than the hidden wiring of how decisions are made.
If venture investors are always looking for business model innovations, not just technological ones, then perhaps one of the most interesting areas is how open or flexible to change are the decision-makers themselves. Plenty of research shows unbiasing people to different perspectives or bringing greater diversity and inclusion (D&I) to a team can improve decision-making and open up new opportunities. The GCV Leadership Society’s committee on D&I is preparing its report on the topic but this issue has insights from GE and others on why and how this path can be undertaken.
But just expanding the mix of people in a team can bring risks if handled badly. The main way this can be mishandled is to underestimate the importance of the cultural and ethical bonds.
Marc Andreessen at VC firm Andreessen Horowitz, whose managing partner Scott Kupor will be speaking at the GCVI Summit, has noted the importance of looking for entrepreneurial teams with the right ethics, aptitude and attitude. And probably no one has gone further in applying effectively this approach than hedge fund manager Ray Dalio, founder of Bridgewater Associates, with his principles of radical truth and radical transparency to create a positive feedback loop for weighted decision-making.
Venture investing has been a simple, powerful agent of change, but not an easy one to do well. Those that have done it well, whether Naspers or Sequoia, have tended to be selective in what they reveal but share common traits in what risks they take as a firm, how they build teams that can succeed over time and what they do to add value to the entrepreneurs and their own customers.
It is probably no surprise, therefore, that Sequoia’s Michael Moritz has co-written Leading, probably the best management book of the past decade (Dalio’s book Principles has a wider scope than management), while Naspers this month looks to add to the $100bn or so of shareholder value they have added in the 2010s through a new structure in Prosus and open a new chapter for growth.
Flexibility for iteration and sensible risk assessment and how value is added to stakeholders to build longevity into corporate venturing programs is the new ‘on’ setting for many as the decade goes through its final few months.
But with this comes recognition of all that has been achieved to reach this point. That more than $1 trillion of venture capital has already been invested this decade, led by corporations helping scale up a cottage, lifestyle industry, has already made the world a better place.
