Ten weeks into my new role at Silicon Valley Bank, fresh from my tenure at Microsoft Ventures, I wanted to share a perspective from SVB. Most of you already know SVB and that we bank a majority of the best startups and venture firms, but there’s perhaps less awareness of our work with corporate innovation and corporate venture groups.
Looking to the Market
Activity and participation are up: 2011–2013 the number of active CVCs increased 29% and in Q3 2013 alone CVCs participated in 140 deals representing $2.1bn or 30% of overall VC funding. Corporates participated in ~40% of the largest 100 tech deals in 2012 compared to 22% in 2009. Traditional VCs are more open to co-investing with CVC and founders are increasingly carving out slices of rounds for strategics. All in all, this is very encouraging.
We did a ‘mash up’ of data from CB Insights, Crunchbase, Datafox & Mattermark to see the Top 20 CVCs 2010–2013. Intel and Google dominate with what accounts for ~25% of the total CVC deals in that period. 400+ deals combined. Mind boggling.
We see Novartis, J&J, Pfizer and Merck in the top 20. Healthcare is big.
Companies need advice on a strategy for incubation, investments and acquisitions; and real services to execute on that vision. That’s where SVB comes in. The industry is busy and noisy (some say ‘frothy’). Let’s say we don’t suffer for dealflow! The myriad flavors of innovation and investment are fascinating and every day we learn about new ways to take best practice and ‘connect the dots’ to help companies gain competitive advantage. It’s all about relationships, and it’s all about the data. Together, they are killer.
We are investing in this function at SVB. We’re hiring. Expect to hear news soon.
These days, most corporates aren’t applying a unilateral R&D or M&A strategy, but are carving out funds from their balance sheet to engage startups with incubation partnerships, thematic accelerators, sandbox environments and complementary collaborations; we also see CVC teams investing earlier and earlier, as the best deals are so competitive.
Our deal sourcing and syndication advice and the value we can deliver via SVB Analytics are highly relevant in this market.
Crunching data aside, in Q1 we have been out and about a great deal, meeting companies and seeing the trends at CES, MWC and beyond.
One of the highlights so far is our Valentine’s Day lunch in San Francisco where we brought together an eclectic group of execs from Amazon, Microsoft, Google, Alchemist, Startup Grind, Founder Institute, Andreessen, Astia, Verizon, Ericsson, Exitround, Pearson, UpWest Labs, Qualcomm, Salesforce, Samsung, Turner, Telefonica and TechStars. Lots of collaboration ensued.
We have an event planned on 14th April with Microsoft around the topic of Internet of Things (IoT) with thought leaders from Intel, Cisco, Samsung, GE and EMC, along with Khosla, DFJ Growth and KPCB. Should be fun. The appetite from corporates and private VCs to meet with SVB client companies is staggering. We believe we’ll see IoT investments and acquisitions increase in 2014.
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