The study on success factors in strategic corporate venturing is based on extensive qualitative and quantitative market research among corporate venturing units and independent venture capitalists. The research project was established in close collaboration with Berlin Institute of Technology and the Steinbeis University Berlin.

1. Success
Factors in
Corporate
Venturing

2. P02.
Key InsIghts »Benefits of corporate venturing are
diverse. Thus corporate venture capital
units can pursue multiple goals
simultaneously, as long as they are
aligned to corporate needs, clearly
communicated within the organisation »Understanding internal and external
and monitored on a long-term basis by deal sources and innovation hot spots,
a concisely defined metric set. in terms of market and technologies,
constitutes an integral part of corporate
venturing activity.
»Financial interests and innovation-
related strategies are not mutually
exclusive. »Assessment of investment opportuni-
ties has to be done in cooperation with
external partners and can be a time-
»Corporate venturing units have to critical issue in some industries.
operate autonomously, but be deeply
rooted in corporate innovation
strategy and connected to business »Processes integrating internal
units to unfold their full potential. and external parties, inspired by new
venturing approaches, have to be
established, either by collaboration
agreements or joint equity (syndication).
Introduction
Methodology
Strategic Setup
Investment Process
Internal Collaboration
Conclusion
Contact

3. P03.
IntroductIon The importance of corporations in
venture capital (VC) has increased
120.000
Rather Financial Focus Rather Strategic Focus
30%
Corporate venturing continuously, especially with respect
100.000 25%
becomes a core to the number of deals they are invol-
tool in innovation ved in.
management. 80.000 20%
Defining and At the same time corporate venturing
measuring success (CV) strategies shifted from financial 60.000 15%
factors is the key to more strategic objectives supporting
performance driver.
the innovation process. 40.000 10%
The shift had no impact on the amount 20.000 5%
of funding, but can explain the incre-
asing share of deals with corporate
0 0%
venture capital (CVC) involvement, as
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
many innovation-related objectives are Data: National Venture Capital Association 2011
based on deal diversity rather than on
Total VC Investment in $M (LHS)
deal size.
Total CVC Investment in $M (LHS)
% of $ Coming from CVCs (RHS)
Definition and measurement of suc-
% of Deals with CVC Involvement (RHS)
cess factors is the most critical factor in
75 0/0 of the underperformers launching and running a successful CVC
but only 22%0/0 of the unit. This challenge intensifies as CVC
top performers regard the units shift their emphasis from purely
definition and measurement of financial to innovation-related goals.
success factors as a major General developments, such as shorter
challenge. technology life cycles and the fragmen-
tation of knowledge, further challen-
ged traditional processes. Introduction
Methodology
Strategic Setup
Investment Process
Internal Collaboration
Conclusion
Contact

4. P04.
ACTIVITy (Number of Portfolio Companies)
Methodology In this study performance is approxi-
mated by a function of continuity and
50 Positive Performance
Negativ Performance
45
Financial returns activity, since financial returns are fre-
do not represent the quently disclosed and do not represent 40
entire strategic the entire strategic value. It is assumed
35
value of corporate that continuity of the CVC units in the & ICT
Media
venturing activities. market and the respective current level 30
Performance can of activity provides an approximation to 25
only be approxima- the strategic value added to the corpo-
ted and has to be
ration. Firms would limit the venturing 20
ICPS
seen in an industry
activity in case of no value creation. To
context. 15
control for differences in industries, the
sample was segmented by investment 10
focus resulting in the two clusters (1) 5
Media & Information and Communica- CoNTINuITy (years of Experience)
tion Technology (ICT) and (2) Industry 0
0 2 4 6 8 10 12 14 16 18 20
and Consumer Products and Services
Analysis based on global online survey (CVC units, n=19; VCs, n=98) and focus interviews (n=91) among managing directors of CVC and VC
(ICPS). The Media & ICT cluster is charac- units; Absolute performance represents the distance to the industry averages, divided by the industry specific standard deviation.
terized by a larger deviation of activity
and continuity and more venturing
experience. Top performers are located 1. Media & ICT 2. Industry & Consumer Product Services (ICPS)
Electronics, Media & Entertainment, Chemicals, Business Products & Services, Consumer Products &
above the respective industry averages Telecommunications, Computer & Peripherals, Services, Financial Services, Life Science & Healthcare, Supply Chain/
(trendlines), underperformer below. Software & IT Services Logistics, Energy & Renewables, Materials, Manufacturing
The data used originates from a
comprehensive online survey among
19 CVC units from 8 countries.
The questionnaire was based on a large
number of focus interviews among Introduction
CVC units and independent venture Methodology
capitalists (IVCs). In addition, an Strategic Setup
adapted version of the online survey Investment Process
was conducted among almost 100 IVCs. Internal Collaboration
Conclusion
Contact

5. P05.
Methodology Strategic Setup (1) is defined
as the initial setup of strategy
HyPoTHESIzED SuCCESS FACToR By PRoCESS PHASES
Three phases and objectives and the respective 1. 2. 3.
constitute the performance measurement. Further, re- STraTegIC InveSTMenT InTernal
SeTuP ProCeSS CollaboraTIon
corporate levant process capabilities, in particular
venturing process: process acceleration capabilities, have Strategic orientation deal Sourcing relationship to bus
(1) The Strategic to be developed.
Setup,
(2) The Investment inveStment proceSS (2) related factors financial orientation external Collaboration relationship to CP
Process and (non equity partnering)
range from deal generation to external
(3) Internal
relations and are regarded on a deal
Collaboration.
basis, but implemented parallel.
Strategic ambiguity Syndication long-Term Horizon
(joint equity partnering)
Continuous internal collaboration
(3) with the corporate parent (CP)and
its business units (BUs) is a major point Performance Measurement venture Support
of differentiation of CVC units from IVCs.
SuCCESS FACToR IN CoRPoRATE VENTuRINg MoDEL
Process Capabilities exit Strategy
InTernal
CollaboraTIon
InveSTMenT
ProCeS external Communication
STraTegIC
SeTuP DIMENSIoNS oF ANALySIS
InduSTry effeCT on
SPeCIfICS PerforManCe
Introduction
Methodology
Strategic Setup
The corporate venturing framework is based Investment Process
on a literature review and focus interviews. Internal Collaboration
Conclusion
Contact

6. P06.
STRATEgIC goALS By PERFoRMANCE TyPES...
strategIc Strategy
Contrary to conventional wisdom top 100%
setup
Technical Innovations + 0%
100%
performers tend to follow a wider
89%
range of innovation-related strate- Window on Technology
67% + 32%
Defining innovation- gies rather than focusing on one core Business Model Innovations
67%
+ 0%
67%
related goals, business line, while taking into account 78%
open New Markets + 77%
without neglecting the importance of financial benefits. 44%
67%
financial objectives The dual focus on financial and strategic Financial Interest
44%
+ 52%
is a core performance objectives of top performer showcases 44%
+ 16%
Improve Corporate Image on Innovation 38%
driver. Performance on the one hand the multiple benefits 44%
measurement should Ecosystem Development + 100%
of corporate venturing in the manage- 22%
be based on either 22%
- 33%
ment of innovation, on the other hand Control for Potential Future Competition 33%
a qualitative or
the need of financial return to legitimate Make use of Non-Streategic Intellectual Property
33%
+ 154%
quantitative metric 13%
the venturing activities in the long run. 33%
set. Promote Corporate Entrepreneurship + 154%
13%
11%
performance meaSurement Improve Consumer orientation
25%
- 33%
Top performers measure the impact of Attract and Retain High Potentials 11%
+ 100%
their corporate venturing activities by a
clear set of either qualitative or quanti- Top Performer
tative Key Performance Indicators (KPIs) underperformer
with a long-term horizon.
STRATEgIC PLANNINg oN KPIS QuALITATIVE VS. QuANTITATIVE KPIS
44% 57% 56% 44% Top Performer
14% 43% 43% 22% 22% 56% underperformer
Short-Term (<6 Month) Quantitative
Medium-Term (6-24 Month) Qualitative
Long-Term (>24 Month) Dual
Introduction
Methodology
strategic setup
Investment Process
Internal Collaboration
Conclusion
Contact

7. P07.
strategIc Strategy & performance
meaSurement MedIa & ICT
STRATEgIC goALS By PERFoRMANCE TyPES...
ICPS
setup Accessing technological innovations
is the major focus of all CVC units.
+ 0%
100%
100%
Technical Innovations 100%
100%
+ 0%
100% Window on Technology 80%
Industry This underlines the role of CVC in the + 33%
75% 60%
+ 33%
background shapes management of innovations. - 50% 50%
Business Model Innovations
80% + 33%
75% 60%
strategic setup. Creating a ‘window on technology’ is 75% 80%
+ 200% open New Markets + 33%
Process acceleration generally considered important, but is 25% 60%
75% 80%
capabilities are more relevant in the Media & ICT cluster, +50% 50%
Financial Interest
60% +33%
primarily relevant due to shorter technology life cycles. 60%
-100% Improve Corporate Image on Innovation + 50%
in the Media In the ICPS cluster top performers show
50% 40%
50% 20%
and ICT cluster. + 100% Ecosystem Development + 100%
a stronger focus on ‚soft‘ objectives 25%
25% 40%
related to image, culture and human - 100% 50%
Control for Potential Future Competition
20%
+ 100%
resources. + 100%
25% Make use of Non-Streategic 20%
+ 0%
Intellectual Property 20%
25% 40%
+ 100% Promote Corporate Entrepreneurship + 60%
Quantitative performance indicators 25%
25% 60%
are more common in the Media & ICT + 0%
25%
Improve Consumer orientation
50%
+ 50%
cluster, which can be explained by - 100% Attract and Retain High Potentials 60%
+ 200%
50% 20%
their greater emphasis on financial
objectives and their generally larger Top Performer
experience in venturing. underperformer
10 0/0 of the CVC units in proceSS capabilitieS
the ICPS cluster regard their In the Media & ICT cluster process
processes as fast compared capabilities, in particular investment
to 63 0/0 in the Media and speed but also process flexibility, are
ICT cluster considered to be more relevant and media
should be part of the strategic setup. and ict
Introduction
icps Methodology
strategic setup
Investment Process
Internal Collaboration
Conclusion
Contact

8. P08.
InvestMent Deal Sourcing
Even though proactive and structured
process deal sourcing is broadly acknowledged,
not all CVC units seem to have long-
Top performers, term-oriented processes in this regard. venturIng trends
especially in Deals are primarily sourced through New venturing approaches will rethink traditional
ICPS cluster, do the personal network, whereas top deal sourcing, external collaboration and venture
recognize the need performers concentrate further on deal support models.
for a systemized ap- sourcing via syndication partners.
proach in deal sour- Top performers have a much CVC units show a very po-
cing and defining stronger ambition to open- sitive attitude towards more
This network dominated deal source up their processes by incor- external collaboration and
relevant technology
structure suggests an opportunistic porating open innovation communication, especially
and market targets.
behavior, which explains the barely elements in their venturing in the Media & ICT sector,
long-term oriented approaches in deal approaches than underper- nevertheless CVC units are
sourcing. The ICPS cluster shows the formers. They appreciate less open than VCs. The
approaches related to sour- progressive attitude in the
strongest interest in this issue, which
cing and nurturing seed Media & ICT sector and
can be explained by their limited expe- and early stage ventures of IVCs indicates that an
rience in corporate venturing and the and mainly value benefits established venturing cul-
fast development of technologies in such as networking with ture has a positive effect on
many sub-segments. entrepreneurs and global openness.
sourcing of new ideas.
% oF CVC uNITS HAVINg LoNg-TERM (>24MoNTH) % oF CVC uNITS uNDERLININg THE CHALLENgE
PLANNINg APPRoACH IN oF SouRCINg
78% 56%
Industry/Market Focus + 16% + 124% Sourcing of investment oppurtunities
67% 25%
56% 56%
Technology Focus -16% + 124% Indentification and definition of target
67% 25%
industries, markets and technology
22%
Deal Sources + 0%
22%
Introduction
Methodology
Top Performer Strategic Setup
underperformer Investment process
Internal Collaboration
Conclusion
Contact

9. P09.
InvestMent external collaboration
Only a minority of CVC units involve a
SynDication
Joint investments are an attribute of
Top performers
strongly syndicate
process broad range of external partners on
a continuous basis in their processes;
top performing CVC units, showing that
those CVC units have realized the value
with other investors
– in particular with
Investment decisions consequently only few do long-term added by diversified corporate venture other corporations.
are supported by planning in this regard. However, top support and deal evaluation. Further
external partners
performers involve selected external perceived key benefits are deal referrals
such as other
partners such as CVC units, IVCs, tech- from co-investors and mitigation of risk.
investors, industry % oF CVC uNITS uNDERLININg THE CHALLENgE oF...
nology and industry specialist, busi- Compared to their independent coun-
experts, research
institutions and ness angels, consumers and lawyers terparts, CVC units focus slightly more 67%
+ 415% Finding adequate co-investors
13%
consumers. in their investment decision. Further, on joint investments with ICVs and other
top performing CVC units, like IVCs , corporate investors. However, CVC units
have a much more positive perception take more than two times less often
of benefits in external collaboration. the lead in investments, which can be
SyNDICATIoN BEHAVIoR By PERFoRMANCE TyPES...
Potential of universities, incubators and explained by their historical follower
consumers remains largely untapped. position. 89% + 33% Syndicate
Beside trust, the integration of external 67%
knowledge is perceived the biggest 78% + 136% Syndicate with
33% other corporations
challenge, in particular by top perfor-
44% + 100% Lead Investor
mers. External collaboration is strongest 22%
and considered most relevant in the
Media & ICT cluster. Top Performer
underperformer
LEVEL oF oVERALL ExTERNAL PARTNER INVoLVEMENT...
Top Performer 33% 56% 11% 50% 40% 10% ICPS
underperformer 33% 44% 22% 13% 63% 25% Media & ICT
High High
Medium Medium
Low Low Introduction
Methodology
overall external partner involvement construct ist based Strategic Setup
on continuity and diversity
Investment process
Internal Collaboration
Conclusion
Contact

10. P10.
InvestMent venture Support
The industry context plays a major
external communication
Despite the general interest in
In line with their
deal sourcing
process role in the type of support provided.
Marketing and human resources
increasing visibility, top performers
communicate investment deals and
behavior, top
performers use
Intensive support support is for example much more networking relevant information, communication
does not limit relevant in ICPS cluster, as these issues rather than corporate and CVC unit channels only for
innovativeness. are usually less broached, required interests. This complements their deal networking and
skills are more special and marketing sourcing behavior. Communication of communication of
is more complex. Innovation-related deals via social media and a website investments.
strategies are generally complemented targeted at network partners is a diffe-
by comprehensive support. rentiation feature of top performers. % oF CVC uNITS CoMMuNICATINg...
+ 100% Corporate Information
% oF CVC uNITS SEgMENTED By INDuSTRy This contradicts the common presump- Similar to external collaboration, 22%
PRoVIDINg SuPPoRT IN... tion, that innovativeness is disrupted communication is most practiced
+ 100% CVC unit Information
by intensive support. Opportunities of and desired in the Media & ICT cluster. 56%
80%
Strategic and Financial Advice + 7% 75% external partner involvement in ven- Communication strategies seem to 22%
- 50% Investment Deals
33%
Research - 15% 60% ture support are not yet fully exploited, be under-developed regarding the
22% - 50% For Networking Purposes
71%
in particular in comparison to IVCs. common focus of many CVC units on 33%
40%
Sales and Distribution - 44%
71%
Most external support is provided by public relations and the common
67% suppliers and other corporations and network focused-deal source structure.
Marketing + 415% Top Performer
13% investors.
22% underperformer
Manufacturing - 33%
33% oVERALL uTILIzATIoN oF CoMMuNICATIoN CHANNELS...
33%
Human Recources + 136%
14%
VC and Entrepreneurship
Events and Fairs
16%
ICPS Print Media
12% 41%
Media & ICT
Social Media
9%
Associations
Introduction
22% Methodology
Websites
Strategic Setup
Investment process
Internal Collaboration
Conclusion
Contact

11. P11.
Internal relationShipS to buSineSS long-term horizon % oF CVC uNITS uNDERLININg
THE CHALLENgE oF...
unitS anD top management Successful CVC units give high scores
collaboratIon Converting and transferring the ventu-
ring output within the wider organiza-
to their parents‘ ability to manage
expectation and to create a long-term 67% + 168% Encourage long-term thinking and
25% support from the corporate parent
Top performers stress tion is a further key value driver. Thus, horizon for the venturing activity.
67%
the need for a strong building strong ties to the corporate Nevertheless, they still regard it as a 50%
+34% Foster internal collaboration and
alignment between Bus and the CVC unit
cooperation between parent and the BUs is considered a major challenge.
the business units major task by top performers. Top Performer
and the CVC unit.
underperformer
They understand The ability of the top management
the challenge to to motivate BUs to cooperate with the
generate a long-term
CVC unit is positively correlated to
oriented horizon of
performance and regarded a major
expectation within
point of critic on the corporate
the corporation.
parent and challenge by CVC units. top management
Top performers additionally criticize
the lack in financial commitment and
flexibility of the parent.
Underperformer and younger CVC units
have problems to manage expectations
towards the top management.
However, they do not regard internal
communication a major challenge.
business Units
CVC Unit
Introduction
Methodology
Strategic Setup
Investment Process
Internal collaboration
Conclusion
Contact

12. P12.
conclusIon SucceSS factorS by performance impact
Critical performance 1. EFFECT oN PERFoRMANCE
drivers are primarily STraTegIC High
found within SeTuP Medium venturIng trends
strategic setup Low Innovation Centers Innovation
and internal Strategic orientation Insignificant Being less of a deal sourcing Incubation Initiative
collaboration. tool, rather than a hub for Approach is appreciated by
financial orientation innovation related activities, firms scoring high in strate-
However, process
phases such as innovation centers rather gic orientation and internal
Strategic ambiguity
deal sourcing and complement the strategic collaboration, due to its inte-
syndication have as Performance Measurement orientation of the corporate grated intra corporate setup.
venturing activity.
well a vital impact Process Capabilities Micro Seed Funds
on performance. 3. Targeted Innovation Firms emphasizing deal
Relevance of certain InTernal Campaigns sourcing, internal collabo-
success factors CollaboraTIon They are regarded an effici- ration and strategic orien-
differs with industry ent deal sourcing tool as tation appreciate the value
background. firms having a high finan- added of this approach, be-
relationship to bus
cial orientation and an ac- cause it sources seed stage
MEDIA & ICT relationship to CP
cent on deal sourcing attest start-ups on a large scale.
High Industry Specific large value added to this
Performance Impact 2. long-Term Horizon approach.
InveSTMenT
ProCeSS
deal Sourcing
external Collaboration
Syndication
venture Support
Introduction
exit Strategy Methodology
ICPS
High Industry Specific Strategic Setup
external Communication Performance Impact
Investment Process
Internal Collaboration
conclusion
Contact

14. P14.
contact Prof. Dr. Marc Drüner
marc.druener@td-berlin.com
Lars-Alexander Mayer
lars-alexander.mayer@td-berlin.com
Philipp Dauderstädt
pd@corporateventurestudy.com
Scientific aDviSor contact us to discuss the
Prof. Dr. Volker Trommsdorff
TU Berlin
implication of the
study results for your
meDia partner
Global Corporate Venturing Magazine
corporate venturing
www.globalcorporateventuring.com strategy.
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www.td-berlin.com Introduction
Methodology
Strategic Setup
Investment Process
Internal Collaboration
Conclusion
contact