Corporate Venture Capitalists (CVC) talk about innovation and investing in large organizations

In preparation for the New York International “Awaken Sleeping Beauty”- workshop on leveraging corporate assets with the help of startups, we joined the Harvard Business School panel discussion featuring four corporate VC representatives. The topic was innovation and investing in large organizations.With more than half a million combined employees, the CVC panelists represent some of the biggest companies in the world. Christian Noske (@ChristianNoske), BMW iVenture, Christina Bechhold (@CMBechs), Samsung Global Innovation Center, Skyler Fernandes (@JskyFerandes), managing director of Simon Venture Group and Andrew Cleland (@awcleland), managing director of Comcast Ventures. They answered questions from Bloomberg's Tim Fox’s at the offices of Mayer Brown in Midtown. Here is our take.All Corporate VCs are not equalThe four corporate venture groups have different strategies, representing almost the full spectrum of the more than 1,000 corporate funds worldwide. The two dimensions to determine a fund's direction are; strategic importance and benefit to the core business and simply investment returns. While BMW is the most strategic of the four, Comcast is driven by investment returns. "We believe that a successful investment return makes a company strategic for us and we don't believe that our corporate colleagues can pick the next Facebook or Snapchat with their metrics", says Comcast's Andrew Cleland.Speedboats within their organizationsOne thing all have in common: they act as speedboats for the mothership, the corporate headquarters. Even large companies have fairly small units and direct lines to approve investment decisions. However, the more strategic a fund is, the more coordination with business units is needed before an investment. Panelists were skeptical of the value of internal champions. "If my investments threaten a long-standing relationship with a vendor, there would be no change to get things done", says Sklyer Fernandez.Current valuations are a problem - but not reallyAndrew Cleland argues that the market as a whole is highly over-valued. Investment opportunities are thus harder to find. "You want a profitable company with low capex and valuation, which is not easy even if you see 5-8 companies every day", says Sykler Fernandes and adds: “Our CEO says there’s nothing strategic about losing money”. However, what is often overlooked is that fact the VC industry is only a fraction of the overall investment universe and if a mutual fund like Fidelity allocates 1% of their assets under management to startups, it distorts the markets. Valuations in the private market are highly misleading as most investors are covered even if values go down.

The next weeks and months will be interesting - to say the leastWith the Fed's rate increase, valuations, and increasingly venture debts, will be tested. The rumors of the Gilt Group being sold for $250 million, less than a fourth of the last private market valuation, are a first indication what might follow.

	BMW	Comcast	Samsung	Simon
Structure	$100 mio, iVenture, part of the services unite; 2 PM in NYC	Independent unit similar to a traditional venture firm, 8 partners and 16 PM	Various innovation and startup units with different offers; 7 PM with 2 PM in NYC	$100 mio, Independent unit; 1 PM
Focus	Strategic	Investment returns	Strategic and investment returns	1/3 strategic, 2/3 investment returns
Reporting & Decision Making	Strategy and service department	Partner decision followed by CFO	Investment manager and unit CEO	Investment manager and CEO
Measurement	Impact on business; e.g. number of charging station at dealerships	Financial return	Number of collaborations facilitated	Financial return and impact on the business