Corporate Venture — The new power broker in the FinTech innovation ecosystem
By: Nicole Anderson
In 2014 40 Corporate Venture arms (CVC’s) invested in a combination of VC funds and accelerators equating to over $29BN. In the same year at least 10 CVCs had fund sizes exceeding $250mill.
Whilst 2014 was a big year for corporate backed exits with the US enjoying 2/3 of the market value, one of the major revelations was that corporate funding was fast becoming the most active ‘seed-to-series A cliff’ player with a whopping 212 1st round (series A) deals in a single year.
The momentum is set to continue. VC firms and CVC’s continue to align in co-investing and while committed capital in VC firms is contracting, corporate venture is growing. More large corporates understand the potential for sustainable business returns and competitiveness by blending corporate venture strategy to innovation acceleration priorities.
FinTech is the perfect storm for corporate venture to be the new power broker in the innovation ecosystem.
Dozens of banks and financial services companies are already committing to ‘seed investing’ and many more are sponsoring large FinTech accelerators around the world. The ‘David and Goliath’ connection is proving itself out in the search for strategic gains and predictable returns. It’s very early days.
Delivering ‘success’ is nothing if it is not sustainable and for those FinTech focused CVCs who understand the power of portfolio management — targeting the early stage/higher risk deal flow and balancing that out through to later stage, lower risk in-sourcing of technology — the chances of repeatable future returns are far greater.
FinTech is formative but for the wise — the entrepreneurs who play well into an enterprise need and the incumbents who have connected the capital/innovation mandate — corporate venture can hold the key to fuelling sustainable global FinTech innovation ecosystems.
Editors Notes: This entry has been submitted to the FINTECH Book, the world’s 1st globally crowd-sourced book on FINTECH. Readers that enjoyed this initial abstract are invited to share and like it so that it may be featured in a longer version.