This blog was started in the aftermath of the 9th Annual MIT VC Conference. See agenda. I both attended the event and served on a panel: “Corporate Venturing – Present and Future”. I realized afterwards that I had more to say on several subjects and I needed to express myself.
The panel I served on included two guys from the non-technology, Global-100 world (Keith Gillard from BASF Venture Capital America and Ricardo Rodriguez from Shell Technology Ventures) and three guys from the software/technology world (Dave Husak, CTO and Founder of Reva Systems (), Steve Eichenlaub from Intel Capital and me). Bill Aulet, Senior Lecturer and Entrepreneur in Residence,
There seemed to be a big difference approach and sensibilities between these groups on the panel. The crowd (many entrepreneurs, MIT Sloan and other students) responded well to the software/technology side of the panel, but it was great to have different perspectives and balance on the panel.
I explained my rationale for including corporate investors in Black Duck. It was planned from the inception of the business plan and founding of the company. I also explained that corporate investors had to be factored into the investor fabric early-on: Not all conventional VC like corporate VCs not just because of onerous terms but also because of negligible value added contributions over time. It’s important to differentiate between corporate investors as observers with minority investments and corporate investors with major investments. But most of all it depends on who are your investors. I am exceptionally lucky, and I really mean it, because I have Lucy McQuilken from Intel and Jennifer Scholze from SAP Ventures. They’ve added value from the inception of their involvement in BDS.
I also said that venture founders should know that there are differences in the color of corporate and VC money. Entrepreneurs should know that corporate investors have different motivations – information and strategic edge – whereas VCs are driven by mainly by IRR, but of course ego plays a major role.
Roger Krakoff, Venture Partner from Sigma Partners –
One think I did not mention during the panel is that CEO events vary greatly between corporate and VC investors. For example, Intel held whopping big CEO events in
I did emphasize to the audience of mostly B-school future entrepreneurs that VCs and Corporate investors are similar at investment time thinking about terms, goals, etc. The old IRR pov comes across loud and clear at that time.
One thing to be hyper-aware about when considering an investment by corporate investor consider information rights and rights of first refusal. These are driven by the gaps the corporate investor is filling. Venture founders should determinate what are the strategic goals of the investor before tying-the-knot.