Corporations are VCs, too

Corporate venture capital isn’t new; companies like Intel, Siemens, Cisco and Johnson & Johnson have long had VC arms. But, as seemingly everything else in the venture realm, the number of active corporate VCs is quickly growing. In 2014, 166 different corporate VC investors completed at least one deal, a 73% increase from the 96 such investors in 2005.

Corporate VC deals have skyrocketed, increasing each year between 2009 (432 completed deals) and 2013 (938). Though deal flow took a slight dip last year, venture capital invested by corporations reached $15 billion, the highest annual figure in at least a decade.

There has been a steadily increasing number of corporate VC exits, as well. Exit count rose by 152% between 2008 and 2014, and the value of exits more than doubled from 2012 ($15 billion) to 2014 ($31 billion).

Taking into account deals closed before 2010 (since post-2009 investments likely haven’t had sufficient time to reach exit), corporate VCs have realized exits at the highest percentage after completing two follow-on investments.

Corporate VCs have realized an exit after only one investment in a company about 1,000 times. The round in which those investments have been made has differed quite a bit. The chart below shows the exit percentage of one-time corporate VC investments based on entrance round:

As more and more corporations add venture capital arms, corporate VC deal activity will surely continue surging. And, especially when the recent boom of investments have time to mature and become ripe for exit, corporate VCs may be cashing out at record levels.

Be sure to keep an eye out for additional corporate VC coverage on the PitchBook Blog, which will include league tables, investment details, industry breakdowns and more.

Source