For the third year in a row, Deloitte and Orange Digital Ventures published a study about the yearly temperature of French Corporate Venture Capital. Here are the main conclusions we drew after asking 24 French CVCs (+50% compared to last year) to share some data — confidentially collected and processed by Deloitte — about their activity in 2018:
1. CVCs are now undoubtedly part of the venture game…
According to CB Insights, the number of new corporate venture arms reached its highest levels, with 773 CVCs active worldwide — among which 264 have invested for the 1st time in 2018. Nowadays, launching a corporate investment activity has begun almost common for US companies, as 77% of Fortune 100 companies (Top 100 US Companies based on Revenue) invest in venture capital, and 52% of Fortune 100 companies have their own investment arms.
The startups CVCs have invested in worldwide have fundraised a total amount of $53Bn, which represents almost the double compared to 2017. (To give you a more global picture of the VC industry, $254Bn have been invested globally into venture-capital backed startups in 2018, as you can find out here)
The 3 main regions CVCs have predominantly invested in are the US, Europe and Asia — the latter recording the highest growth rate from 2017 to 2018 (+62% of deals in volume).
One figure in particular shows the increasing weight of CVCs on the venture market: in 2018, almost one fourth (23%) of all venture deals worldwide has included at least one CVC.
A similar growing trend can be observed in France, where the average number of CVC investments has doubled in 2 years, from 3.5 deals in 2016 to 7 deals in 2018, according to the 24 CVCs who participated to our study. In addition, the average investment ticket of all interviewed CVCs grew by 45% in 2 years, from 4.3m€ to 6.5m€. These figures tend to show that French CVCs position themselve on more investment opportunities, and that they invest in average more money in each round — or that they invest at later stages. 71% of the CVCs we talked to are confident in increasing their investment capacity in 2019 — whereas they were only 50% to be as optimistic last year.
2. …and so are French CVCs
As last year, we wanted to collect basic information about our peers: What is the typical size of CVC teams? What is their preferred stage or sector to invest? Do they do more than simply investing?
How do French CVCs look like?
From what they told us, it appears that the average size of a French CVC is 8 collaborators — including 3 people dedicated to “not-investing” functions, as business development, finance or marketing — but can vary from a single employee to 24 people. No less than one third of employees are women, which is not enough but still a bit better than in Tech in general (only 8% of female Tech entrepreneurs in France, and how we can act to improve this ratio). French CVC is a dynamic industry, as 75% of interviewees have declared to have hired new team members in 2018.
In terms of investment strategy, the preferred investment stage for French CVCs is series A ; we’ve noticed a decrease in the number of pre-seed rounds in which French CVCs participated, whereas there was an increase in series B. Obviously, results can be challenged since the panel increased between 2018 and 2019, but it also demonstrates the existence of a follow-on funding pocket for French CVCs on larger rounds — a necessary strategy given the dynamism of the market and the growing amounts raised by European startups.
Usually, CVCs tend to favor the follower posture — that’s the case for 62% of the interviewees — when positioning themselve on a deal, making them VCs’ complementary strategic partners more than fierce competitors.
The 4 industries French CVCs invest most in are Mobility, CleanTech / Energy, Connectivity and FinTech.
Without surprise, the 5 biggest venture deals in which at least one French CVC participated in 2018 reflect such a trend, illustrating the rise of Mobility, FinTech and Energy.
In terms of geography, French CVCs invest most in France (41% of the startups added to portfolio), Europe (excl. France, 32% of their 2018 portfolio), while North America and Asia each represents 12% of the new investments. In 2018, 3% of the startups they’ve invested in are African startups. Even if they haven’t invested in Latin America yet, 17% of the respondents are thinking to steer their investments there.
3. French CVCs are ideal partners for growth
Even if it’s an important part of the fund’s objective, CVCs are usually not primarily driven by financial return. Indeed, when investing in startups, 79% of our pool of respondents have in mind open-innovation.
And it works: in practice, 70% of the interviewees state that they have enable their corporate to carry out Proof of Concept tests with the startups of their portfolio, leading for more than half of them (56%) to a commercial agreement.
Those synergies are not performed by the invisible hand; more than half of the respondents have built a team dedicated to helping portfolio startups. In 80% of the cases, this support consists in implementing business development and a direct contact with the Corporate. The remaining 20% includes several services, such as creating networking events for the portfolio’s startups, providing infrastructures and working spaces, etc.
This collaboration proves to be successful, as 20% of French CVCs led at least one startup from their portfolios to IPO throughout the last 5 years: such as Prodways, Ascendis, Pharma, Kalray, MyoKardia, McPhy, Cellnovo.
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To read the whole study, click here. We’d like to thank the 24 CVCs who voluntarily answered our questions, among which: Alliance Ventures, Safran Corporate Ventures, Sodexo Ventures, ADP Invest, ALIAD Venture Capital, Via ID, Michelin Ventures, MAIF Avenir, Engie New Venture, SNCF Digital Ventures II, Up Innovation, SEB Alliance, Edenred Capital Partners, Construction Venture, Total Energy Ventures, MM Inov’, Airbus Venture Capital, Sopra Steria, Convivialité Ventures, Danone Manifesto Ventures, ZeBox, Orange Digital Ventures.
If we missed a French CVC with a dedicated team or if you have feedbacks on how we could improve this study, do not hesitate to contact me at manon.caussade@orange.com, I will be pleased to update the post. See you next year!
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About Orange Digital Ventures
We stand as an early-stage corporate fund to support unconventional and driven entrepreneurs from around the world whose ambition is to imagine, design and develop tomorrow’s services and technologies. We engage with compelling technology startups, creative spirits and visionary founders to help them achieve breakthrough innovation in the digital industry, accelerate their growth and successfully bring their products and services to the market.
Since 2015, we have invested in 22 companies.
Find out more at http://digitalventures.orange.com/
