Corporate Ventures: The Key to Corporate Innovation and Growth?

On September 25 SS&C Intralinks held its fifth annual M&A Insights Panel at the Rosewood in Menlo Park, CA. The focus of this year’s discussion was around corporate venture capital (CVC) and what role CVCs play to drive corporate innovation and growth.


7 October 2019

Intralinks Rosewood 2019 Panel

Pictured above (L-R): Scott Beechuk from Norwest Venture Partners, Kevin Jacques from Visa Ventures, Spencer Chavez from Salesforce Ventures, Rashmi Gopinath from M12 and Nick Washburn from Intel Capital.

This was a timely topic for two main reasons. Firstly, the lifespan of a public company has fallen from 60 to 20 years over the last half century, as a result of technology, disruptive innovation and increased M&A. Secondly, over the past decade, CVCs have been created by hundreds of companies. Last year, there were 773 active CVCs worldwide, participating in 23 percent of all VC-backed deals, with the average CVC deal size reaching an all-time high of $26.3 million (source: CB Insights). In 2018, 264 CVC firms invested for the first time, an increase of 35 percent from 2017.

The panel discussion was moderated by Scott Beechuk, a partner at Norwest Venture Partners, and comprised Spencer Chavez, principal, Salesforce Ventures; Nick Washburn, senior managing director – COO, Intel Capital; Rashmi Gopinath, managing director, M12 (formerly Microsoft Ventures); and Kevin Jacques, global leader, Visa Ventures.

Scott Beechuk began the discussion by asking the panelists to speak through the reason companies like Intel, Salesforce, Visa and Microsoft form a venture arm.

There was broad consensus that CVCs occupy the intersection between strategic and financial objectives. In other words, investments should carry some relation with the mission of the company, and there must also be sensitivity to the financial return. The conclusion was that CVCs are strategic investors that act and feel like a financial VC. VC financial returns are expected for a CVC.

However, the CVCs on the panel, despite all investing from their corporate balance sheets and tying their investment bias toward corporate challenges, emphasized their autonomy and capacity to move quickly and decisively on an opportunity. The intent is to be the eyes and ears of the corporate in the start-up ecosystem and to be solid partners with founders. An investment is not made with the intent to acquire a company; if that occurs it is driven by the corporate, in complete independence of judgement from the CVC. M12’s mission is to keep a pulse on tomorrow’s transformational and disruptive technology. M12 provides “entrepreneurs unparalleled access to Microsoft’s ecosystem and invests in early-stage B2B companies, with a specific interest in those with their heads in the cloud and on the edge.”

Intel Capital’s mission, which started back in 1991, carries a similar tone to that of M12. Since its formation Intel Capital has invested over $12.6 billion across 1,560 companies. 677 of those companies have gone public or been acquired, with only 24 being acquired by Intel. Five years ago, Intel Capital was doing about 70 deals per year with follow-ons, and operated in Latin America, India, China, South Korea, Japan, Eastern and Western Europe as well as North America. They had an active portfolio numbering over 450 companies. Recently Intel Capital has refocused, bringing the number of active portfolio companies down to approximately 320. They have scaled back activity, doing around 30 new deals a year with a worldwide team of approximately 40 investment professionals (approximately 30 of which lead new deals), investing primarily in the U.S., Western Europe, Israel and China. The focus is now on leading deals and taking board seats. The motivation behind this refocus was a review of their most successful investments. Success increased when Intel Capital leaned in and took a larger stake in the company and was a more active strategic partner and board member. Salesforce Ventures and Visa Ventures’ mission was similar in that their primary motivation is to support and grow their current platforms. For Salesforce, that is to remain focused on creating the world’s largest ecosystem of enterprise cloud companies. Portfolio companies are strategically aligned with Salesforce and offer customers with further innovation Since 2009, Salesforce Ventures has “formed partnerships and helped accelerate the growth of over 300 technology startups.”

The biggest benefit of linking with CVCs, at least the ones on the panel, was that they have a direct connection and relationship with the consumers. This can be appealing to start-ups as they can quickly tap into a channel and scale their business.

Visa Ventures looks to invest and partner with innovative early-stage firms in the payments, fintech and emerging technology spaces to advance Visa's growing global payments network. Visa Ventures is unique in its CVC approach as it typically signs a commercial agreement in conjunction with its investment.

While Scott made the point that all the CVCs on the panel were “strategic” investors, he called on the panel to define what “strategic” success or return meant to them.

We found out that strategic returns are very contextual, tied to the business of each of the CVCs. As each CVC invests from the balance sheet there is, of course, sensitivity to the financial return. Depending on the investment stage, CVCs expect venture returns, but the metrics of strategic success are defined differently by each CVC. For Visa Ventures the metric of success is very clear: Will the investment increase the capabilities Visa’s payment network can provide? Salesforce has a similar metric for success: Will the investment help Salesforce’s ecosystem get bigger? For M12 and Intel Capital the metric for strategic success was tied to whether the investment would help their companies ride tomorrow’s disruption and whether their sales and distribution network could bring value to their portfolio companies as well as the corporate.

What then is the pitch that CVCs use to capture the attention of companies?

All panelists touted the unmatched market access companies gain from being tied to their venture arm. In the case of Intel Capital it is their ability to provide full access to the market through highly curated introductions to Intel’s end customers and partners in the Global 2000. For Microsoft it is providing the founders/start-up company with a range of synergies, including access to strategic guidance and go-to-market access through close connection with the different Microsoft businesses.

Ultimately CVCs pitch themselves as being independent, financially-driven, providing win-win and synergistic relationships with emerging companies and unique access to the market. At the end of the day capital is a commodity, so these CVCs need to differentiate themselves by the value they can provide to the companies, usually in the form of accelerating founder/start-up company milestones. There’s perhaps the misconception that CVCs just provide investment capital and then take a back seat, only turning up at a board meeting every quarter. According to the panel discussion, nothing can be further from this misconception; these teams are highly engaged and motivated to see their portfolio companies succeed.

They work on a thesis-driven investment approach where each define the areas of interest to their businesses. Once the core areas of interest are defined, research is prioritized into that segment and typically targets are selected.

There was a question from the floor that suggested CVCs move slowly and aren’t as quick as financial investors in making a decision. Each of the panelists pushed back, stating that they can move very quickly if they need to. While decision-making velocity is important so is making sure the right match is being made between portfolio company and CVC. The five- to seven-year journey of co-existence starts with the investment offer, so it is better to be sure of the long-term fit with the investor.

The biggest benefit of linking with CVCs, at least the ones on the panel, was that they have a direct connection and relationship with the consumers. This can be appealing to start-ups as they can quickly tap into a channel and scale their business.

The panel concluded by discussing deal flow and how these CVCs source the best opportunities.

The panelists agreed that they work on a thesis-driven investment approach where each define the areas of interest to their businesses. Once the core areas of interest are defined, research is prioritized into that segment and typically targets are selected. At Visa Ventures around two-thirds of their opportunities emerge from the product or partner network. The fintech space is fairly concentrated and regulated which tends to naturally confine the universe of targets.

At Visa Ventures around two-thirds of their opportunities emerge from the product or partner network. The fintech space is fairly concentrated and regulated which tends to naturally confine the universe of targets.

To cap the panel discussion Scott asked each of the panelists to provide one sentence of advice for anyone considering CVC as well as to point to their proudest investment to date.

Nick Washburn at Intel Capital, a CVC who began his career originally as a corporate attorney, suggested keeping an open mind, that any background could lead you to CVC. Nick emphasized that all his investments have made him proud, so he cited one of his most recent addition, the team at Mesmer, a leader in Robotics Process Automation for Development (RPAD), changing the way developers do their work.

Rashmi Gopinath at M12 recommended companies research their options and come to the table with a clear list of asks: What are you looking for and what value can you bring? Similarly to Nick, Rashmi confirmed all her deals had made her proud, so she also cited one of her more recent investments, Contrast Security. Contrast automatically detects and fixes vulnerabilities and defends against targeted attacks and bots with no scanning or scheduling required.

Spencer Chavez at Salesforce Ventures encouraged CVC professionals to have strong opinions supported by data. He hit the attendees with a well-known recent IPO in Zoom, the cloud-native platform delivering enterprise scale video conferencing tool.

Lastly, Kevin Jacques at Visa Ventures suggested anyone looking into CVC should clearly understand what strategic return means to the corporate parent. That clarity of measurement of success and mission will ensure you are well placed to respond to scrutiny from the investment committee. Kevin referred to a deal he worked on at Intuit where a partnership was struck with Glance Networks’ SmartLook that allowed Intuit’s Turbo Tax product to gain several points in market share over the years. The SmartLook co-browsing capability is marketed through several DJ Khaled adverts during tax season.

If you missed the panel event and would be interested in attending future events on this subject, please email me. We are planning on doing similar events in New York and London in the coming months.



Torben Rankine

Torben Rankine

Torben is Director, Market and Customer Engagement. Over the last 20 years Torben has worked in management consulting, finance and fintech across Europe, Latin America and North America. For the last 12 years Torben has been working in the San Francisco Bay Area. When he first came to the U.S. he worked for a Funds of Funds, invested primarily into the asset-based lending space. He then went on to be the director of business development for a financial technology company providing services to some of the largest mutual funds, pension plans and hedge funds in the world.