How are we doing in Latin America? Do we have mixed units of M&A, Corporate Venturing and R&D and Innovation?? or What do we have?
Video: Corporate Venturing
From downtown San Francisco to Palo Alto, companies like American Express and Ford are opening offices and investing millions of dollars in local start-ups. This year, American Express opened a venture capital office in Facebook‘s old headquarters in downtown Palo Alto. Less than three miles away, General Motors‘ research lab houses full-time investment professionals, recent transplants from Detroit.
“American Express is a 162-year-old company, and this is a moment of transformation,” said Harshul Sanghi, a managing partner at American Express Ventures, the venture capital arm of the financial company. “We’re here to be a part of the fabric of innovation.”
But unlike traditional venture capitalists, multinationals are less interested in profits. They are here to buy innovation – or at least get a peek at the next wave of emerging technologies.
Banco Bilbao Vizcaya Argentaria, the large Spanish banking group, opened an office in San Francisco last year. The team, which has about $100 million to fund local start-ups, is looking for consumer applications that will help the bank create new businesses and better understand its customers.
“We are in one of the most regulated and risk-averse industries in the world, so innovation doesn’t come naturally to us,” said Jay Reinemann, the head of the BBVA office. “We want to avoid the video-rental model. We want to evolve alongside our consumers.”
The companies are hoping to tap into the entrepreneurial mind-set. Multinationals, with their huge payrolls and sprawling operations, are not as nimble as the younger upstarts. While they are rich in resources, big companies tend to be more gun-shy and usually require more time to bring a product to market.
Of the 750 corporate venture units, roughly 200 were established in the last two years, according to Global Corporate Venturing, a publication that tracks the market. In the last year, corporations participated in more than $20 billion of start-up investments.
Big business has played the role of venture capitalist before, with limited success. During the waning days of the dot-com boom, financial, media and telecommunications companies sank billions of dollars into start-ups. Companies say they are taking a different approach this time. Rather than making big bets across the Internet sector, investments are smaller and more selective.
As they try to find the right start-ups, some are forging tight bonds with local firms. BBVA, for example, is an investor in 500 Startups, a venture firm that specializes in early-stage start-ups and is run by Dave McClure, a former PayPal executive.
Unilever and PepsiCo are limited partners in Physic Ventures, a venture capital firm designed to help corporate investors build commercial partnerships with portfolio companies. Both Unilever and PepsiCo have installed full-time employees in Physic’s downtown San Francisco offices.
American Express has stacked its investment team with technology veterans. Mr. Sanghi, the head of the office, has spent roughly three decades in Silicon Valley and formerly led Motorola Mobility’s venture arm. Through its network of relationships, the office has met with roughly 300 start-ups in the last six months.
The connections have started to pay off. Vinod Khosla, the head of Khosla Ventures and a co-founder of Sun Microsystems, introduced the American Express team to the executives at Ness Computing, a mobile start-up. In August, American Express partnered with Singtel, the Singapore wireless company, to invest $15 million in Ness.
Taken from: Mutinationals stake a claim in venture capital. New York Times. Evelyn M. Rusli
Nine of the 10 possible IPOs this year identified by news provider CNN has corporate venturing backing.
This could be a record. The 10th is Arista Networks, founded and funded by legendary entrepreneurs and angel investors David Cheriton and Andy Bechtolsheim – their trophies include writing the first cheques to search engine Google and server maker Sun.
The 10 are:
Twitter, backed by DST, Mail.ru and JP Morgan
Violin Memory, backed by Toshiba and Juniper
Square, backed by Visa, Starbucks
Xoom, backed by SVB Financial Group
Dropbox, backed by Goldman Sachs
Box, backed by SAP Ventures and Salesforce
Marin Software, backed by SAP Ventures
Kabam, backed by Intel Capital, Warner Bros and MGM
Opower, backed by General Electric
Taken from: Corporate Venturing, Jame Mawson.