In this series on CVC investment strategy, we’ve been taking a look at four overarching, strategic themes, inspired by some of the most successful CVC investment decisions we’ve seen in the market to date. The aim? To help you get the most out of your CVC and uncover the best ways to accelerate innovation in your organisation.
In the age of experience, there’s no doubt that your customer will let you know if something is lacking in your core product offering – either with their words or with their feet. By investing to address these weaknesses, organisations can proactively defend their position in the marketplace. One of the best examples of this type of strategy involves investing to create an ecosystem around a business’ core product offering. Consider Salesforce Ventures (SFV), which has been investing in enterprise cloud companies which support their core ‘Customer Success Platform’ (formerly CRM) product offering. Not only does this allow them to access their customer base through multiple channels, but also increases customer retention and lifetime value with Salesforce-affiliated companies fulfilling their wider Customer Success needs. SFV actively collaborates with the heads of their internal product lines to see where their existing business may lack coverage, helping them to address these key areas of weakness.In the age of experience, there’s no doubt that your customer will let you know if something is lacking in your core product offering – either with their words or with their feet.
For instance, SFV led the Series C of Vlocity alongside Sutter Hill Ventures this year, which has built a range of industry specific cloud apps added onto the Salesforce platform which help customers deliver personalised and seamless omnichannel customer experiences. Vlocity helps Salesforce increase the usefulness of its core platform offering, expanding the channels through which Salesforce can add value, and ultimately increases the defensibility of the platform it has created.
Similarly, at the end of March 2018, Samsung Ventures invested $4.6m in the Series A of Audioburst, an Israeli startup which has developed speech-based technology to enable search and other interactions in technology. The intention is to include the audio search engine platform in its devices, including Smart TVs. This adds to the capabilities of their existing devices, increasing the defensibility of Samsung’s position in the market. This investment occurred at a time when Samsung has been trailing in the race to use voice as an interface with technology, currently being led by the likes of Google’s Assistant and Amazon’s Alexa.
It’s no longer enough to produce the best product available for the customer.
With more buying power than ever, and honed skills of comparing and contrasting options, the customer now wants the best product ecosystem in the market. The more capabilities, the better. A solid CVC investment strategy, that increases defensibility of a core product offering by prioritising the customer, can only maximise retention and lifetime value. And in my book, that’s a win-win for all.
Stay tuned for the next in the series when we take a look into the opportunities for corporates to acquire new or expand existing revenue and profit lines.
Missed part one? Read it here.