Coverage by Bhat Dittakavi of TiE Hyderabad and AI4ICPS.in on “Corporate Venture Capital” panel discussion on 13th December at TGS 2022, Novotel Hyderabad
Corporate ventures bring an undue advantage of bringing their business as a ready customer to Startups. They may bring more caveats unlike traditional VCs who might be more flexible. Let us deep dive into CVC value proposition.
Avnish Sabharwal, MD, Accenture Venture
Dr. Aloknath De, Ex CTO Samsung Ventures
Moderator: Neeraj Thyagi, We Founder Circle
Neeraj: Kindly givr your background
Dr. Aloknath: When I joined as CTO at Samsung, mandate given to me was to bring inn. In last 25 years we filed 7500 patents from.Bangalote itself. Helthifyme is our first investment in India. 2028 onwards we have been continually investing into various startups.
Avnish: I was corporate lead at Accenture. I gave a recommendation to my superiors that we should do innovation from without. Partner with more disruptive agile startups. Wishes have a nasty habit of coming true and I am pulled into my own idea. I have been enjoying my journey now and made me much younger working with younger startups.
Neeraj: How are corporate ventures different?
Dr. Aloknath: ROI game us the same. we focus with strategic purpose. We look at whether we missed in a new technology, is there a product fitment? These questions enable us to choose startup as a partner. Consumer experience and consumer reach is something if out partnership with startups csn increase, we are game.
Avnish: Startegic investments like what do are necessity not just about ROI game. We don’t mind reasonable financial ROI but strategic fit is key.
Neeraj: We bring local SMEs with a local benefit. There is some similarity. How big is the impact of open innovation
Avnish: Idea is joint Go-to-Market. Serve our customers with digital transformation journey of our clients. We generated a billion dollars last year through startup Accenture collaboration. Startups come to us for global.market access without spending a single dollar! Accenture venues are also like 2 inch wide and 2km deep. We focus on few but deep. We did 65 investments in total. We invested recently in PIXEL SPACE, a spacetech stratup. They provide high resolution imagery that helps us get into new industry. We also do acquisition if the startup is heavily biased.
Dr. Aloknath: Samsung used to do car making. We did an acquisition in that space. AIOT platform is where we globally invested in 2015 itself. Do we lead or do we follow the investors? We do all the models. Fliqstream is where with angel netwoek we invested. Our check size is 1-5 million in India. Our investment into Swiggy is very strategic. The product fitment is our primary criteria.
Neeraj: Partnering at seed stage is also something corporates are venturing now. Learnings that indian corporates can take from the Industry?
Avnish: Corporate ventures is yet to be fully understood funding asset class. Three reasons. 1) Overall construct of CVC is not well understood. Can Accenture Venture do the CVC as a service to its customers? There is no guide book . 2) Lot of corporates this startups are a Hugh risk. If startups do direct investments, it could be. Then we suggest fund of funds to mitigate. They can do as LP or multiple funds. 3) Government tax and policies are dreaded. Innovation is always followed by regulations. If we address these three things, there is significant upside for CVC in India.
Neeraj: How should Startups approach you? How should they pitch?
Dr. Aloknath: Startup is a startup. There is no difference. Many a times we do investment first and then the GTM comes. We invest in the technology potential. In some cases it is a about business first and immediate fulfillment. Short term means partnership and long term means startup investment. Where will it fit? How will it fit? Samsung health has an SDK. Can startup take this SDK and enrich their solution?
Avnish: Samsung looks at product fitment. Accenture looks at GTM value add. CVC is joint on thr hip with the parent. Is there a close alignment with the parent? When do startups get interested in an exit? Strategic option of CVC means startups should be very clear on which CVC do they choose. Failure rate of startups with CVC investment is half of the ones with just traditional CV. Exit rate of CVC funded startups is double compared with that of the traditional VC funding.
Dr. Aloknath: Corporates have SMEs and internal diversity of product lines. This technical mentorship is de facto
Neeraj: There is reluctance and long learning curve with CVC. Role of CXOs
Avnish: I have invested in 15 startups as an angel. The more CXOs get involved in Mentoring and advisory, they got a lot back as well. We also else a lot. There is lot of reverse Mentoring that happens.
Dr. Aloknath: CXOs are part of governance and hence they give you direct insights.
Avnish: India is third largest startup ecosystem. CVC must be part of that.
Dr. Aloknath De: Package your products correctly and also solve Godoy problems.