Corporate Venturing Shifts Gears

Corporate Venturing Shifts Gears

          
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Corporate Venturing Shifts Gears

How the Largest Companies Apply a Broad Set of Tools to Speed Innovation
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  • A little over three years ago, our first report on corporate venture capital (CVC) investing stated that “CVC appears to be here to stay.” (See Corporate Venture Capital: Avoid the Risk, Miss the Rewards, BCG Focus, October 2012.) Although time has validated that insight, we did not foresee how quickly and deeply CVC investing would take root and evolve. From 2010 through 2015, the overall amount of venture capital investments nearly doubled, but the amount of CVC investments grew even faster. Thus, as a share of overall venture-capital investments, CVC investments increased from 7% to 9%. In addition, the number of corporate venturing tools expanded rapidly—CVC is now only one on a long list that includes accelerators or incubators and innovation labs.

    CVC investing has also spread to new industries and new regions worldwide, but the US remains the most popular target for CVC investing. From 2010 through 2015, CVC investing in the US had a compound annual growth rate of 32%. China has attracted strong interest in recent years as well, with CVC investments in the country reaching 5% of all venture investments in 2015.

    Investing in innovation is critical to remaining competitive today. To assess and measure innovation, we analyzed venture capital investments in seven industries: automotive, chemical, consumer goods, financial services, media and publishing, technology, and telecommunications. We found the overall degree of innovation—approximated by the amount of VC invested from 2010 through 2015—to be high, with technology companies posting the highest result. In the past year, the momentum of innovation—a comparison of the amount of VC investments in 2015 with the average amount of VC investments from 2010 through 2014—rose sharply, with automotive and financial services companies having the greatest momentum. (See Exhibit 1.)

    exhibit

    We also analyzed the innovation strategies and venturing tools used by the top 30 companies (by market capitalization) in each of the seven industries, as these companies are particularly active corporate venturers. This report discusses the increasing diversification of tools these companies are using to pursue innovation.


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