Orange Silicon Valley’s Corporate Venture Capital Summit returns to our San Francisco event space on June 8. This year, the programming will dig into timely issues driving investment and innovation for top corporations. The invitation-only CVC event comes at the conclusion the 2017 Orange Fab Corporate Summit and will put CVCs, VCs, strategics, and Fab Force partners in one room to discuss the state and role of corporate venture capital and how corporations and venture capitalists can work together to further innovation through investments.
Derek Au has played a major role in bringing those leaders together. As a principal overseeing venture capital and investment research at Orange Silicon Valley, Au pays close attention to technology and market forces that drive CVC investments in venture. In a brief interview, he offered a preview of what’s on the menu for June 8, as well as what he hopes to hear discussed.
OSV: What have you been doing leading up to the CVC Summit next week at Orange Silicon Valley?
AU: It starts with the program. While there are a great many new faces to the CVC community due to the launch of new CVC initiatives over the past few years, it is still a very small group of us. We mostly all already know each other from invariably having run into each other at the handful of CVC events. The challenge then was to come up with a day’s worth of programming covering topics that have not already been revisited numerous times, and if they have, it was because we could never converge on clear answers.
OSV: What are the highlights on the program this year?
AU: Professor Ilya Strebulaev from Stanford is interesting. He was introduced to me by Claudia Fan Munce, who founded IBM’s venture group and generally regarded as the “Dean” of CVC. Claudia and Ilya teach a course together on corporate venture at Stanford. Last year Ilya did a study on how CVCs invest, putting together some broad survey data behind some “truths” that most of us simply accepted such as “the team is more important than the business.” This year he looks at CVCs and corporate innovation. I have not seen his findings so it will all be new to me as well.
OSV: What are you most interested in from a personal and professional standpoint at the event?
AU: For me it’s not so much the programming; it’s the questions that people ask and the mood of the room. I see that every year these CVC things get bigger and bigger. Something’s going on, and the question is whether or not this is sustainable. CVC programs make a lot of sense on paper, but after three, four or five years, somebody’s going to do an audit and say, “Did this really move the needle for us? If so by what dimensions.” And I don’t think there’s a clear answer. This is one of the issues that keeps being brought up at conference after conference — and for which there’s really no answer that is, if you toss out the financial returns, how do you measure success? ROI is hard, innovation and insight is soft.
OSV: Are there any trends from the last few years that you see reflected in the lineup of speakers, either in terms of cycles or where CVCs are at right now?
AU: You see a lot more international representation. Lot’s of Japanese and Chinese investors. New faces — which is always good — but also seemingly companies that you wouldn’t think of as having a CVC program. Tech stalwarts such Intel and Google have had CVC programs for a while. But then you see that Walmart, Jet Blue and other manufacturers have them now as well. You see all of these non-tech-focused companies getting into the space.
Pharmaceuticals as well. Traditionally, pharmaceutical companies have — because of these block buster drugs are ever harder and costlier to find that they settled on doing M&A. They go and find some startup that has taken a drug through some early clinical trial and then when deemed sufficiently derisked, they take them off the market, But now they’re actually doing venture, which is kind of interesting.
OSV: What kinds of questions do you hope get raised in the summit’s discussions?
AU: I hope people challenge the model. So rather than cheerlead for what’s going on, I would hope that people in the audience — and the moderators — probe at issues where people might say, “It’s not working very well.” I don’t want to be negative, but why reinforce what is known already? I think we should be in the mode of problem solving and improving.
There are two tracks that are kind of interesting. One is how CVCs and VCs can work together. What I’ve tried to do is I’ve brought in a bunch of these partners from traditional VCs. And their job is to interface with the ecosystem and work with corporates. The track is to explore how traditional VCs and CVCs co-invest together and then after the investment is made, what are the expectations of each? Do they expect the CVCs to be actively driving sales for the investment? What were the mis-matched expectations? If it’s out in the open then there is a way for people to improve or at least be mindful of how they engage.
OSV: What do you hope to see the CVCs who are there walk away with?
AU: Those types of things — the issues that are beyond superficial reasoning. I think we’re beyond that. Rightfully or wrongfully, people are pretty convinced that these things are here to stay, at least for a little while, and that they are valuable initiatives for corporations. And if that is the accepted truth, then how do we make it better? So if they’re here to stay, but they’re not perfect, what can we do?