VCJ Report: Corporate VC is Back

Corporate VCs, like the locust, follow cycles. When times are good, they come in droves to munch on the innovation growing like leaves inside technology and medical startups.

When times are bad, they return to their solitary habits.

Times must be good again because by all accounts corporate venture investors are back in action. They are chasing what many describe as a new flowering of startup innovation in Silicon Valley and, to a lesser extent, elsewhere in the United States.

However, as Mark Boslet reports in the latest issue of Venture Capital Journal, VCs question whether strategic investors, who often consider financial gain a secondary goal, can deliver on promises of support, especially when many corporate venture programs were dormant during the past decade and lost in-house expertise.

On top of that, excesses are starting to appear. The first quarter saw almost 10% of venture dollars invested in the United States come from corporate VCs, a nine-year high that suggests a bubble may be forming.

“We are now seeing more corporate VCs across the board,” Arvind Sodhani (pictured), president of corporate investor Intel Capital tells VCJ. “More corporates either co-invest with us in many of our deals or compete with us on some of our deals.”

In six years as president of Intel Capital, Sodhani has turned the chipmaker’s VC arm into an active instead of passive investor.

He boasts that if Intel Capital were a standalone venture firm, it would generate top quartile returns. Sodhani also says that if corporate VCs are to be successful, they will need to adopt models similar to the one he created at Intel.

Subscribers of VCJ can read the full story about the uptick in corporate VC by clicking here. In addition, an expanded interview with Sodhani is available here.

Not a VCJ subscriber? Click here for a free trial.

And if you want to talk more about other corporate VC or other hot trends, send an email to VCJ editor Alastair Goldfisher at alastair.goldfisher@thomsonreuters.com or contact him on Twitter at @agoldfisher.

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