Corporate Venture Investment Hits a Record $37 Billion in 2017
Last year, was big for corporate venture capital — $37.4 billion big.
That’s the total record amount of money invested by the corporate venture capital industry last year in 1,268 financing deals, according to a report from Pitchbook and the National Venture Capital Association released Friday.
Overall, corporate venture capital entities participated in 44% of all 2017 venture deals. The number of CVC deals increased 3% last year, while the dollars invested jumped 15%.
Additionally, CVCs did larger deals last year. CVCs participated in roughly 29% of all venture financings of more than 25 million in 2017, the highest proportion since at least 2006. More than $11 billion of transactions completed last year included at least one corporate venture investor, according to the report.
“While CVCs have certainly been active across the venture life-cycle, these investors have not been shy to cut large checks as the industry has continued to necessitate in order to participate in follow-on fundings,” the report said.
So, what’s behind the influx of corporate capital?
“These companies, whether they be foreign biotech or IT, they’re finding a lot of value in the venture market for new technologies, especially when you think about the smaller companies developing these technologies are being more agile — are able to create and shift and innovate must faster than a larger corporation would,” Kyle Stanford, Pitchbook analyst, said during a webinar.
Consider the auto industry where nearly all major OEMs, including General Motors and Ford Motor Co., and tech giants like Google and Intel, have invested in artificial intelligence-driven smart car technologies to help boost their R&D results. Lyft’s $1.5 billion of deals last year, for example, included investment from CapitalG (formerly Google Capital), while Lyft got $500 million from General Motors in 2016.
But increased corporate activity isn’t relegated to just the auto industry. Pharmaceutical and biotech companies have also been looking to startups working on breakthrough tech and drugs. For instance, Grail’s $1.2 billion funding last quarter saw Merck, Bristol-Myers Squibb and Johnson & Johnson all participate.
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(Editor’s note: Pitchbook defines corporate venture capital as investments directly from the company or from its dedicated venture arm.)