As the global market for startup investing presses to new heights in terms of dollars invested this year, and deal volume ticks up in several regions, corporations are diving into the action.
Data from CB Insights and Stryber indicate that corporate investors are taking part in deals worth more than ever, even if corporate venture capital (CVC) deal activity is not up uniformly around the world.
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In a sense, it’s not surprising that CVCs are seeing the deals that they participate in rising in size — the global venture capital market has trended toward larger deals and more dollars for some time now. But questions lie inside the eye-popping figures: How are corporate investors adapting to a more rapid-fire and expensive venture capital market? We also wanted to know if CVCs are shaking up their deal sourcing, and whether the classic corporate venture tension between strategic investing and deploying capital for financial return is seeing a focus mix shift.
To help us understand the data we have at our fingertips, The Exchange reached out to M12’s Matt Goldstein, Sony Innovation Fund’s Gen Tsuchikawa and WIND Ventures’ Brian Walsh. (TechCrunch last covered CVC outfit WIND Ventures here.)
Let’s talk data and then dig into the nuance behind the numbers.
A boom in deal value
Precisely measuring CVC activity is interestingly difficult. When we discuss the value of venture capital deals, for example, what counts and what doesn’t is a matter of taste. For example, how to treat the SoftBank Vision Fund. Do deals that it leads that include venture capital participation count toward larger VC activity for a given period of time? What about investments led by crossover funds?
No matter what you choose, aggregate venture capital data will always include dollars invested by non-venture entities. So you do the best you can. CVC has the same problem, amplified. Because CVCs are often participatory to deals, instead of leading them, especially in the later stages of startup investing today, tallying concrete corporate venture investment is difficult. So we proceed in the same manner as we do with aggregate venture data counting, including deals that a particular investor type participated in.
Perfect, no. But it’s consistent, which is what we likely care about more. All that’s to say that when we observe the following deal and dollar data, CB Insights notes plainly that for its purposes, “‘CVC-backed funding’ and ‘CVC-backed deals’ refer to corporate venture capital participation in these funding rounds.”
Fair enough. Per CB Insights’ H1 2021 CVC report, CVCs participated in $78.7 billion in funding activity in the first half of 2021, a record for a half-year period. That dollar figure was derived from some 2,099 deals around the world. Precisely how strong those figures are is not clear from their absolute scale.