Corporate Venture Capital (CVC) investment strategy is a big topic and only gaining momentum from the market. We’ve taken a look at two of four overarching, strategic themes inspired by some of the most successful CVC investment decision we’ve seen to date. In this article, we take a look at the third of these themes; opportunities to acquire new or expand existing revenue and profit lines.
For every company on the defence strategy there’s more looking to broaden their existing offerings to gain tangible bottom line results. Investing to target new lines of revenue and profit is one of the most understandable measures of success for a CVC. Delivering existing products through new channels, reaching new markets, or increasing existing market share are just some of the examples of acquiring new revenue streams.Investing to target new lines of revenue and profit is one of the most understandable measures of success for a CVC.
Take Comcast Ventures leading the $3m seed round, and joining Chinese theme park operator Songcheng in the $6.5m Venture round, in virtual reality (VR) platform Spaces, which delivers unique VR, augmented reality (AR) and mixed reality (MR) experiences in theme parks and retail locations. We can see this adds a further channel to deliver content of its subsidiary, NBCUniversal, whose VR content capabilities have been bolstered significantly in 2018 following the announcement of their partnership with Google to produce VR experiences. Whilst preparing Comcast to take advantage of this new revenue channel, it also hedges against the risk of their existing content becoming obsolete as new entertainment channels are adopted.
Similarly, our client, ABB, participated in the Series B of Indian dairy tech startup Stellapps through ABB Technology Ventures. Stellapps provides end-to-end cloud solutions for individual farm optimisation and monitoring across India. ABB’s investment partnership complements their food and beverage Manufacturing Executing System, and targets the currently underserved and broad-based Indian rural dairy industry, which is expected to grow at 15% CAGR until 2023. This investment is driven by ABB’s wider “Next Level Strategy”, supporting one of their core value propositions of, “automating industries from natural resources to finished products”. Grant Allen, former GM of ABB Technology Ventures, pointed out that this investment partnership, “enables ABB to go to market in India with a cloud-
connected, IoT-led, digital dairy solution”.
Companies adopting a proactive approach to CVC investment strategy can reap the rewards of a diversified portfolio and a stronger place within the market.
While investing to acquire new revenue streams has been used to target growth, it can also complement a wider strategy to modernise a company through digital transformation. Companies adopting a proactive approach to CVC investment strategy can reap the rewards of a diversified portfolio and a stronger place within the market.
Is it time you thought about your CVC investment strategy? We can help with that.