• Cato

Corporate Venture Capital in 2019

Updated: Jul 30, 2019

In less than two weeks it’s time for fireworks, champagne and kicking off a brand new year. So let’s make some predictions about how the Corporate Venture Capital industry will fare in 2019. My predictions are for the CVC market in South East Asia. This market is much less developed than it's US and European counterparts so some of these predictions might not apply elsewhere.

1. Another Record year for CVC In early January you will see reports that state 2018 was a record year in terms of amounts invested by CVCs into startups. It’s a bit too early to say what the final amounts will be as we still have some days to go, but it is already clear that even with no new deals announced 2018 will surpass every previous year by a big margin. This is a global trend but it is very clear even in South East Asia. It seems likely that this trend will continue next year although the growth rate might tamper off a bit. Barring really major negative events in the global economy 2019 seem likely to be another record year for CVC investments.

2. A lot more deals where CVC’s are involved It is not only the total amount CVC invest into startups that is on the rise. The number of deals that CVC’s are participating in has also been increasing. In many ways this is a more important number for startup communities to watch because the total amount invested can be made up of a few mega deals, whereas the number of deals made says more about how active CVC’s are. In South East Asia we are seeing a clear trend of CVC’s being involved in more deals, especially via corporate incubators and accelerators but there is still a lot of room to grow compared to CVC’s in US and Europe. We predict that this trend will continue and pick up speed in 2019 and we will see CVC participation in a lot more deals next year.

3. First Success Stories The growth of the CVC industry in South East Asia only really started a couple of years ago. This means that by 2019 the early investments should have had time to grow and show some results. We are looking forward to seeing the first generation of startups that have really benefited from the rise of CVC in the region emerge next year. Having one or two big success stories coming out of CVC investments and South East Asia would further increase the positive trend we are seeing in CVC.

4. Friction In US several financial VC’s have expressed strong concerns and negative opinions about Corporate VC’s. While some of these concerns might be valid it is difficult to overlook the fact that these opinions are mostly expressed by VC’s – who would benefit from CVC’s having a bad reputation. As CVC’s in South East Asia will increasingly be competing with financial VC’s for more deals in 2019 look out for similar reactions.

5. CVC a lucrative career option As more and more large companies are putting significant resources behind their CVC strategy it is becoming an attractive career option for talent that would other vice look at a career in VC/PE or senior positions in growth stage startups. This in turn makes the CVC units better equipped to hit their targets and more likely to succeed. So this will also contribute to the positive trend we have seen this year. Expect to see more CVC jobs where compensation more resembles that of financial VC’s in 2019.

As you can tell we believe 2019 will be another exciting year for Corporate Venture Capital.

Next week I will dive deeper into other aspects of CVC in South East Asia. Stay tuned!

For additional reading we recommend this article: https://www.toptal.com/finance/venture-capital-consultants/state-of-venture-capital-industry-2019


Cato