The idea of being a founder has never been so popular around the world, so how is that going to change industries and entire regions? This year we dove headfirst into the rise of corporate venture capital, the changing nature of venture capital education, and the important task of startup ecosystem building.
Fast Growing Corporate Venture Capital
With headlines from Softbank, Google Ventures, Qualcomm Ventures and more, corporate venture capital is growing faster than ever. In 2018, we saw this trend reach new heights with more corporate venture capital (CVC) funds than ever. And in 2019, 500 decided to dive into CVC behavior in an unprecedented way.
From May to July 2019, we surveyed over 100 unique corporate venture capital investors (CVCs), across key industries and geographical locations, to explore these trends and further understand the industry’s pain points.
We asked questions like:
- What were important motivators for your parent organization to start its venture activities?
- How are strategic and financial returns weighed against each other?
- At what stage do you make the most of your investments?
- Which markets, technologies, and sectors do you anticipate will be the most important for your industry in the next two years?
What did we find?
As our Managing Partner, Bedy Yang, wrote in the full report, “We anticipate that corporates have an increasingly outsized role to play in the startup ecosystem, and our conversations with C-Suite executives have revealed the extent of the challenges they face while also highlighting new opportunities for growth.” To read the full report, download it here.
So, what does this mean for the future of CVC?
We see CVC as a big opportunity in the US, Europe, Japan, and Southeast Asia right now and going forward. While we expect the investments to taper off in some areas, we still see room for growth in these regions.
Improving Venture Capital at its Source
Venture capital has great influence on what the future of our economy looks like, but it’s also a relatively small mix of venture capitalists, investors, limited partners, and a support system for the whole industry to function. It’s these players in the ecosystem that, like the founders they invest in, have to constantly be innovating their methods. Here’s how we think venture capital is going to change in 2020.
A focus on corporate venture education in 2020
We’ve been working to help educate 100+ participants this year in programs like our VC Unlocked programs including our Bootcamp for Accelerator Managers, VC Unlocked: Miami, and VC Unlocked: Silicon Valley. As corporates continue to enter the space, they too are looking for insight on how to invest in this asset class efficiently and with the highest returns.
33% of CVCs we surveyed in our CVC report hired external counselors at the inception of their fund, and one-quarter did this at the execution stage.
Education for VCs and angel investors is gaining traction, with more and more programs popping up in response to the demand of successful entrepreneurs, family offices, corporates, and even individuals wanting to get in on the action in the tech sector. The biggest trend is the increasing interest from corporates wanting to learn how to engage successfully with startups without crushing them.
At 500, we provide access to the best opportunities for future growth by tapping into the innovation outside the four walls of a corporate company, by learning about the technologies and trends that are disrupting industries and investing in startups who are experimenting with new business models and capturing new customer segments.
Continuing on our promise to diversity
There is one other major aspect of VC education that has made strides this year: diversity. With even 500’s very own executive team reaching gender parity, we have continued to make diversity a part of 500 Startups’ DNA, from founders to employees, and even the people we choose for our highly selective investor training programs. We make sure every single cohort of up-and-coming investors or accelerator managers is composed of a diverse group of people in terms of gender, race, age, sexual identity, and background.
Diversity has always been a core value at 500. We’re committed to being champions of the global VC community, not as it is, but as we’d like to see it. That’s one of the many reasons we are excited to head into 2020 by continuing our diversity scholarships for underrepresented early-stage investors, including women and/or people of color. We are particularly interested in supporting investors who are backing similarly situated founders. For an example of what we are looking for, be sure to check out our upcoming Deal Camp at Berkeley and our diversity scholarship for that particular program.
The Key to Building the Startup Ecosystem
We believe startups are the most powerful driver of innovation and economic development. As 500 Startups has grown, so have the many ways we continue to support these founders and foster thriving ecosystems. We are best poised to enable this transformation leveraging our global startup investment portfolio of over 2400 companies, ecosystem development expertise, and key partners and communities across 76 countries. Our flywheel of investment, ecosystem development, and global talent and insights allow us to create economic value at a global scale that we hope to continue growing in 2020. We are fully aware that our success is dependent on the founders, companies, and governments that we work closely with to help drive global innovation.
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