Image Credit: Maksym Poriechkin
Corporate venture capital (CVC) is an investment by a corporate (fund) into external startups in order to make a financial return or to gain a competitive advantage. CVC is a polarizing subject and opinions are divided. Fred Wilson from Union Square Ventures believes that it’s evil and corporates should not invest in startups but simply buy them. While Marc Andreessen from Andreessen Horowitz on the other hand is co-investing with corporations such as General Electric. Whatever the opinions are, fact is that CVC is on the rise, also in the old continent.
In order to get a good overview of the scene, Sirris.be, the non-profit I work for that maps European technology scaleups, recently looked at all of the European tech companies that have raised at least $1 million in 2016 from corporates. The data (which you can view here) is comprised of $17 billion funding and more than 1,650 transactions from 31 countries. Additional input came from the Corporate Venturing Europe group.
How big is the CVC impact in Europe?
Corporates have been involved in at least 292 deals worth $4 billion in investments in 2016. The biggest investment was $398 million in Africa Internet Group by AXA and Orange.
While the European scaleup ecosystem is strongly oriented towards B2B, CVC investments are more balanced: 51 percent in B2B and 49 percent in B2C companies.
The majority of CVC are balance sheet investments, although there is a trend towards dedicated corporate venture capital funds. CVC funds are often exclusive to a single corporation, although there are also CVC funds that are co-investments of companies that have complementary activities, such as Aster Capital, which was jointly created and funded by Alstom, Schneider Electric, and Solvay Rhodia. We even see co-investments from competitors, such as the Belgian SmartFin Capital fund, where competing banks (Belfius and ING) participated.
Especially notable is that a third of CVC funds active in Europe are from the US. As for the size of CVC funds, 8 percent are under $10 million; 15 percent are $10 – $50 million; 23 percent are $50 – $100 million; 31 percent are $100 – $500 million; 8 percent are $500 million – $1 billion and; 15 percent are over $1 billion. CVC funds account for 11 percent of active investors (VC accounts for 51 percent), making it a viable source of capital for cash-hungry scaleups.
France is the European CVC champion
With 67 deals and more than $1.1 billion of capital raised involving corporations in 2016, France leaves Britain (61 deals, $984 million) and Germany (55 deals, $710 million) behind. As a result Paris (50 deals) is the corporate venture city of Europe followed by London (46) and Berlin (32).
The Nordic, once again performs well, with Stockholm (13) and Oslo (9 deals) on position 4 and 5. In fact 29% of all investments in Norway have corporates involved.
The usual suspects: Salesforce and Intel
Salesforce Ventures (11 deals) and Intel Capital (8 deals) are the most active investors leveraging their CVC funds for extending their ecosystem and reinforcing their core offerings.
Salesforce is focused on investing in scaleups that are an extension of its platform, often marketing tech companies. It co-invested in French Augment and Dutch Emark. Salesforce Ventures was involved in $286 million of investments in Europe last year.
Intel invests across a wide number of industries, including automotive, software development, manufacturing, supply chain, virtual reality, and Internet of things. It always co-invests with other VCs and CVCs. Intel Capital was involved in $223 million of investments.
Both Salesforce and Intel made a significant investment in Sigfox, a French provider of Internet of Things connectivity. Sigfox raised a $161 million series E with participation of Total, Tamer Group, and Air Liquide.
A less obvious investor: The French state-owned national railway company
SNCF is one of the most active CVC investors in Europe investing strategically in new technologies and innovative business models in the mobility space, with five deals amounting to $43 million. Its investments include OnePark (a parking market place), Allocab (a private driver market place), and LuckyLoc (a rental car market place). SNCF invests alone or in combination with other CVCs such as insurance company Allianz.
SNCF’s most spectacular investment is Navya Tech, an autonomous vehicles manufacturer that bagged $32 million from other corporate…