presentation duisenberg - 2
DESCRIPTION
BASICS TO VC; slides (ii-IV)TRANSCRIPT
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Brian Park and Erik P.M. Vermeulen
Chasing Strategic vs Financial Returns: How Should CVCs Operate?
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Following the Herd! Start a CVC!
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0
25
50
75
100
2010 (Est.) 2011 2012 2013 2014 (Est.)
Corporate/Direct off the balance sheet
LP in VC FundLP in VC Fund (Optimized)
Total CVC
CVCs Are Gaining Steam!419 Global CVC Initiatives 2010 (2H) to 2014 (1H)
Spin-off (1 LP)Spin-off (1+ LPs)
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0
10
20
30
40
2010 (Est.) 2011 2012 2013 2014 (Est.)
Corporate/Direct off the balance sheet
LP in VC Fund
LP in VC Fund (Optimized)
CVCs Are Gaining Steam!419 Global CVC Initiatives 2010 (2H) to 2014 (1H)
Spin-off (1 LP)
Spin-off (1+ LPs)
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Calculated % of Deals with CVC
National Venture Capital Association
02468
101214161820222426
19951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
20132014
Start a CVC! Are You Kidding Me? Number'of'Startups'Founded'! Number'of'VC'firms'!' Number'of'Industries'Disrupted'!' Number'of'Unicorns'(1+'B'Valuations)'!' Number'of'IPOs'!' Number'of'M&A'Deals'!' Number'of'Media'Coverage'on'Startups'! Number'of'People'Employed'by'Startups''!'
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Calculated % of Deals with CVC
National Venture Capital Association
02468
101214161820222426
19951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
20132014
Start a CVC! Are You Kidding Me? Number'of'Startups'Founded'! Number'of'VC'firms'!' Number'of'Industries'Disrupted'!' Number'of'Unicorns'(1+'B'Valuations)'!' Number'of'IPOs'!' Number'of'M&A'Deals'!' Number'of'Media'Coverage'on'Startups'! Number'of'People'Employed'by'Startups''!'
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Fundraising
ContractingDeveloping
Harvesting & Distribution of Returns
Investors
VCs
Portfolio Companies
Exit
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Fundraising
ContractingDeveloping
Harvesting & Distribution of Returns
Investors
VCsExit $
Spin- Outs
Portfolio Companies
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Developing
Harvesting & Distribution of Returns
Exit Open Innovation Acquisitions
0
10000
20000
30000
40000
50000
60000
70000
0
4
8
12
16
20
24
2009 2010 2011 2012 2013 2014
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202 of the 419 CVC Initiatives are inactive or have made 0 investments since their fund has closed
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202 of the 419 CVC Initiatives are inactive or have made 0 investments since their fund has closed
Why?
(1) Herd Behaviour (2) Lack of Focus/Interest (3) Lack of Internal Know-how/Talent (4) Internal Politics (5) Wrong Incentive Structures (6) Disappointing Performance (7) Regulatory Issues
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Key Takeaways
1) Corporates must act like a VC.
Corporate Engagement in VC is IMPORTANT, But Highly Variable, Cyclical (Herding) Strategic Aims Must Take the Backseat to Align Incentives, Expectations, Aims w/ Startups = FOCUS ON FINANCIAL RETURNS! Corporates Can Have Role in Ecosystem, But Only Under 2 Specific Circumstances:
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Fund-of-Funds
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VC Fund
Secondment
Partner
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Top-quartile funds often over-subscribed
Disruptive (entrepreneur-friendly) Visible
Hyper-active
Past Performance
Future Performance
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Key Takeaways
1) Corporates must act like a VC 2) Otherwise, its best that they invest directly in a VC, FoF (as a real partner)
Corporate Engagement in VC is IMPORTANT, But Highly Variable, Cyclical (Herding) Strategic Aims Must Take the Backseat to Align Incentives, Expectations, Aims w/ Startups = FOCUS ON FINANCIAL RETURNS! Corporates Can Have Role in Ecosystem, But Only Under 2 Specific Circumstances:
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erik .verme
ulen@philip
s.com
e.p.m.verm
eulen@til
burguniver
sity.edu