How to Create a Winning Corporate Venture Capital Fund: A Book Review of Masters of Corporate Venture Capital by Andrew Romans, General Partner of Rubicon Venture Capital.
“Masters of Corporate Venture Capital by Andrew Romans, is highly recommended – very insightful.” reports Anna Smith to LA Tech News.
Masters of Corporate Venture Capital, starts with motivations and goals as to why corporations establish corporate venture capital funds.
Some corporate reasons why to establish a corporate venture capital funds depend on the company goals. Key reasons could include access external innovation, tap into real-time business intelligence on artificial intelligence, machine learning and other transformational technologies impacting their business. Additionally, increase corporate revenues, create a pipeline of investment opportunities, create opportunities for the corporate to benefit from equity and technology scouting, drive HR decisions, drive M&A to name a few corporate objectives.
Goals are determined by the corporation. The key recipe for success as advised by Andrew Romans, is to have buy in with top C level executives and get top executives to sign a document that outlines the top prioritized objectives of Corporate Venture Capital, (CVC). Upon agreeing on objectives, as a corporation setting up CVC, use list of goals to drive all of decision making on strategy and structure for the CVC’s unit operation. Romans provides case studies of other top CVC programs like Telefonica and Cisco that highlight step 1 is to invest into financial VCs to access deal flow and established networks in Silicon Valley and other key ecosystems and step 2 is to cherry pick and invest in startups that can provide strategic value to at least one business unit in the corporation.
There are twenty-five cases studies of successful CVC’s that include Intel Capital, IMB Ventures, Microsoft Ventures and Google Ventures. A few examples that provides successful structuring of CVC’s, how utilizes CVC funds for corporate and partnership wins, success with the funds, and how CVC contributed to evolving businesses. Andrew Roman discusses successful tips on establishing a corporate venture capital fund and ways to setup a long-term strategy for a CVC fund while sharing experiences from other Venture Capitalists.
A particular example that resonated with me, includes Microsoft Venture program, Rahul Sood Founder and CEO of Unikrn told the story of how the fund was put together. A group came together and built a plan that would position Microsoft as a leader in connecting large companies with startups. “Microsoft is unique and we can deliver customer revenue success and scale to startups.” Some of the core guidelines for the Microsoft Venture Program, including helping startups to build and grow, Microsoft enterprise customers access innovation, and to help Microsoft innovation. The Microsoft venture was highly successfully and launched a network of seven Microsoft Accelerator programs around the world. Accelerators and Incubators, CVC Investing in other VC funds, Funds of Funds, with additional successful case studies in detail are additional ways to setup a CVC fund are entailed within the book. Within the book, case studies provide in detail strategies that works and how to implement CVC utilizing incubators, and Funds of Funds (FoF) to invest and access to the funds.
Chapter 5, Advice and Best Practices for Corporate Venturing Related to CVS’s, Entrepreneurs, and Financial CVS, gives best practices for Corporate Venturing related to CVC’s, entrepreneurs, and financial venture capital. This chapter offers practical advice, best practices, failures, and pertinent advice on how to structure your CVC and how a CVC can add value.
The book then transitions into the good, bad, and ugly collective knowledge from CVC’s, entrepreneurs, and venture capitals. Crucial advice for entrepreneurs, when trying to decide which VC to take money from. Andrew Romans, gives a formula to execute as an entrepreneur .Three things to consider chemistry with the lead partner, the reputation of the VC firm and economics of the deal,( valuation, exit strategy, etc.)
How to Get Funded by Corporate Venture Capitalist, Chapter 7 for me is really exciting to learn about and one of my favorite. There is a simple method to map out how you strategically fit within your potential corporate investor, understand their process, and how to approach CVC’s and win.
The book ends with recommendations and conclusions for the best corporate venturing programs, list of top 100 Venture Capital Firms and some projected earnings and performances from CVC’s funds.
In summary, the book provides an insightful real glimpse into Corporate Venture Capital. Andrew Roman’s writing is simple and to the point but detailed enough that this book has invaluable information that will help both a Venture Capitalist, and entrepreneur in many different ways.
This is a book review and preview – click to purchase.