Investor Perspectives—Corporate Venture Capital
- David Gammell
This continues our series of blog posts recapping our January QuickLaunch University webinar on VC investing and what to expect in 2018. If you missed the first two posts in this series, you can catch up on our Launch Blog.
A trend in 2017 was the general increase in corporate venture capital, which grew to more than $37.4 billion, with a substantial increase in the total number of deals from the previous year. However, the corporate VC often comes with a catch. They often want terms that can impact the growth of a company because they want extras, be it strategic or intellectual-property related, or want to guide a company’s development and potentially change the trajectory of the company. It is something to be cautious of, and our QuickLaunch University webinar panelists weighed in during our recent VC roundtable:
“We do see a lot of corporate VC activity, moving upstream to the point where you'll see a multi-billion-dollar company offering to be part of seed investing with a 500K check… I generally prefer to see people stay away from the corporate deals certainly at the seed stage, ideally even at the A stage, and just wait to see how your company evolves a little bit before you lock in these partnerships that might last 5 or 10 years. I think even though there's a willing audience now, it's better to put it off if you can.” Russ Wilcox, Pillar
“I think it's really valuable for the right time in the right phase of the company. So, I think, too early, and you're picking a fight that you don't need. But much later on, it can be really valuable to have them in the as you're trying to raise more money or make these bigger, that they last longer. And to be honest, I haven't seen the acquisition part pan out the way I expected. This is my small sample size, but just because you do have a corporate VC does not mean that they're going to acquire you. If you have them in there, it's because they have strategic value. They can introduce you to customers. They can give you insight into the market. They can facilitate certain things. But having them in just as a pure safety net is not worth it in my opinion.” Vanessa Larco, NEA