It doesn’t take a lot of research to notice that Corporate Venturing is here and it’s not going anywhere, quickly. A year ago, in fact, Teddy Himler (a senior associate at Comcast Ventures in NYC) wrote an article for Forbes where he noted that 75 of the Fortune 100 at the time, were active in corporate venturing, with 41 of those having a dedicated CVC team. In fact, at the time, these 75 represented a growing source of capital as well, participating in nearly a third of all U.S. venture deals and 40% in Asia.
It was clear then that Corporate Venture Capital’s growing role in financing entrepreneurship was undeniable. And, today, we find that very little has changed. If anything, that trend still continues on. In fact, just this month, a Renault-Nissan-Mitsubishi partnership launched a $1 billion corporate venture capital fund to focus on investments in “new mobility” including electrification, autonomous systems, network connectivity and artificial intelligence.
In an age of rapid technological change, the traditional corporate R&D process just won’t cut it anymore. Bureaucracy and slow decision-making are impediments to a company’s ability to innovate and the speed of execution. As younger companies like Tesla are surpassing incumbents in their industries, the established players need to change to keep up.
Rather than trying to make a corporate R&D department into something it’s not, corporations are finding additional ways to bring innovation into their established business models – by making venture investments
So, what do they know that the rest of the economy doesn’t? Nothing – they’re simply reading the signs, moving to where the need is, and recognising talent and skill available through smaller, up-and-coming businesses who are disrupting the entire marketplace. Quickly.
In this blog, we take a look at the development of Corporate Venture Capital investment within the Automotive and AutoTech industries.
Who’s topping the list of investors?
The Renault-Nissan-Mitsubishi launch aside, there are very few surprises when it comes to Corporate Venture Capital investors investing into the Automotive and AutoTech space. In late 2016, the likes of Samsung Ventures, Castrol, Qualcomm Ventures, Magna International and Denso were topping the list of deals made, with Ford Motor Company, Volvo, Verizon Ventures and Intel Capital not following too far behind. Tom Whitehouse, Chairman, LEIF and Contributing Editor to Global Corporate Venturing mentions. “It’s no surprise to see Ford, Castrol, Magna and Volvo on this list. They are incumbents with a track record in innovation they need to protect and sustain. But the presence of companies more renowned for their internet and digital expertise such as Intel, Qualcomm, Comcast and Verizon, confirms that transportation is a huge new territory ripe for connectivity, whose future will be determined as much by software innovation as hardware.”
Interestingly enough, over the same period, the top Corporate Venture Investors invested heavily into the transport industry with Tencent, Softbank, Alphabet, Alibaba and General Motors taking the lead on the deals concluded up until the end of 2016.
What have they invested in?
Looking at some of the top autotech deals reached between 2011 and 2016, the writing was on the wall, even back then. An undisclosed strategic group of investors, managed by Portfolio Company Zoox, invested heavily into the Autonomous Driving category with an investment of $200 million. Now, almost 7 years ago, even then, Automation was the future development worthy of masses of investment opportunity.
Also in 2016, Ford Motor Company, Sensata Technologies, Delphi Automotive, Samsung and Baidu heavily invested in Sensors and Lidar technology with a total investment exceeding $240 million collectively.
Car Connectivity and Cybersecurity, Driving Risk and Safety Management and Car Insurance also topped the period of investment having received considerable investments from Corporate Venture Capital investors like Liberty Global, General Electric, Audi, Bill Gates, Route 66 Ventures and more.
So, what does this look like moving forward?
We return back to Tom Whitehouse, who predicts the following:
“There is growing recognition that the war to dominate the future of the transportation sector (or just stay in it) is going to be long, hard and very expensive. Ford is preparing its shareholders for the long haul, warning that profits will fall as the company increases its investments in new technologies. In remarks to investors reported by the FT, Ford’s CEO, Mark Fields, preached what will have sounded like a new automotive religion to many of his shareholders. “We are really rethinking our business models … for years we have very much thought about the ‘thing’ and how much of the ‘thing’ we sold. Now we are thinking more about usage … and so miles travelled becomes an important metric,” as important as the number of cars sold.”
Looking for a new opportunity to find the right Corporate Venture Capital investor for your business? Or are you an investor looking to invest in an exciting new opportunity that will leapfrog your organisation to where it needs to be? CFPro Ventures bridges the gap between businesses who are ready to grow, and the investor community. Talk to us today about getting started.