For a sense of scale, at $475bn it would be bigger than Argentina's economy.

The scale of money going in to support front-end innovation in the US is what first catches your eye. According to analysis by Gerald Brady, at Silicon Valley Bank, in a webinar hosted by DLA Piper last week, it is more than $475bn as just the “first dollar into innovation to create a patent or a first company”. For a sense of scale, at $475bn it would be bigger than Argentina’s economy – a top 10 country 100 years ago – but a touch smaller than Norway’s, as measured by gross domestic product from the World Bank’s latest figures.  The largest part of this US figure, which excludes things like intellectual property licensing, mergers and acquisitions and friends and family money, is corporate research and development (R&D). At $280bn, corporates spend more than 60 times on their in-house R&D than they do through their corporate venturing units, which SVB estimates at $4.4bn. This is despite Brady saying a dollar spent on corporate venturing brings three times the number of patents as the same dollar invested in R&D. Brady noted the other factors impacting corporate innovation and their desire to work with entrepreneurs – both inside and and outside the organisation – were the speed of change and the reduced cost and time to market for start-ups helping lead to an explosion in activity, as well as corporate chief executives starting to look how to grow their earnings per share through boosting revenues rather than cutting costs. That other corporations are actively trying to expand across borders and sectors through their venturing activities and global competition is heating up puts an extra pressure on incumbents to develop their innovation strategies – an important theme of our Symposium on May 21-22. Given that entrepreneurs in life sciences that have corporations in their syndicate have a 40% exit premium to their peers without strategic backing and you have a recipe for enormous supply and demand push towards an increase in corporate venturing activity. Brady noted that while venture capital (VC) – as provided by independent firms with purely financial aims – used to be synonymous with innovation capital a decade ago, now this has changed. In a wide-ranging discussion, he noted the rapid growth of crowd funding, on platforms such as Kickstarter and CircleUp, from effectively zero to $2.8bn last year; angel investors providing $22.5bn; the US government spending $125bn on R&D (primarily by the Department of Defense); and universities gaining $25bn from contracted…

Subscribe to go deeper

GCV subscribers get access to all our proprietary data and deep-dive articles, as well as the global directory of CVC investors.



Not sure if you have a subscription?