Asia, Europe Corporate Venturing Gains Against North America
When it comes to corporate venture capital activity, North America is starting to fall behind, according to a new report from CB Insights.
CVC participation in Asia grew to 29% of overall deal share in 2017 from 21% in 2016. Deal share to European companies also grew to a high of 20% last year.
This means North American deal share receded to 49% in 2017 from 58% in 2016, losing its majority share of global deals, the report — published Wednesday — said.
On a quarterly basis, corporate venture activity to Asian companies reached 38% in 4Q17, nearly matching CVC participation of North American companies at 40%. This continues a trend of growth in CVC deal share to Asia and away from North America — CVC deals by Chinese companies nearly doubled from 2016 to 2017. Deals increased 94% to 163 deals from 84 deals.
CVC deals by US companies increased slightly to 847 deals in 2017 from 843 the year prior. Funding increased 9% to $18.7 B in 2017 from $17.2 B in 2016 — a five-year high.
Meanwhile, interest in India for CVC participation has also gained greater interest, with CVC participation increasing to 43% to 57 deals in 2017. Notable deals included $55 million to healthcare services company Practo Technologies and $50 million to online marketplace company Nestaway Technologies, according to the report.
And despite ongoing Brexit discussions, CVC activity to UK-based startups grew 19% to 75 deals in 2017. However, funding decreased 35% to $759 million in 2017 from $1.16 billion in 2016, marking a three-year funding low.
“There are many macroeconomic variables at play, but it appears that 2017 lacked the mega-rounds (+$100 million deals) included in years past,” Jud Waite, Intelligence Analyst for CB Insights, told INV Global. “Deal activity is typically a more reliable indicator of growth than funding for this reason — a few mega-rounds can skew quarterly or annual funding totals, and are not necessarily tied to macroeconomic factors.”
Globally, GV (previously Google Ventures) was the most active corporate venture investor , investing in more than 70 unique companies last year. Intel Capital was the second most active corporate venture investor, followed by Salesforce Ventures. Qualcomm Ventures followed close behind, while Legend Capital and GE Ventures tied as the fifth-most active CVCs.
“We’ve seen continued rise to more CVC investment units,” said Waite said during a webinar. “This model is clearly seeing increasing adoption over the years.”
Newer corporate ventures include Honeywell Ventures, launched last May and GMG Ventures, from The Guardian newspaper, launched last October.
“That said,” Waite added, “within the world of CVC, I think we are seeing more activity surrounding early stage investment and more CVC units adopting more early stage platforms like accelerators and incubators. This is a great way for new CVC groups to enter the landscape and investment system without significant capital, and without really specific initiatives… it allows them to take a more research approach to the whole process of CVC investing.”
