Samjong KPMG "Utilizing CVC Necessary for Discovering and Investing in Promising Companies"

[Asia Economy Reporter Park Ji-hwan] As more companies are establishing corporate venture capital (CVC) to pursue new businesses and develop new technologies, it has been found that CVC investment is most active in the United States.

Samjong KPMG recently released a report (Global CVC Analysis Report) that investigated the operational status of 489 global CVCs. It analyzed the countries where global CVCs such as BMW iVentures and Unilever Ventures were established, their organizational structures, investment sectors, and investment portfolios. CVC refers to venture capital (VC) funded by general corporations with financial and strategic purposes to invest in venture companies.

According to the report, among the 489 global CVCs, 43.5% (213) were established in the United States, with CVC establishments concentrated in Silicon Valley, where the venture ecosystem is well-formed. Most companies set up CVC organizations near their headquarters to strengthen the bond between the parent company, CVC, and venture companies, but some established CVCs in overseas innovation hubs such as London, Singapore, and Beijing.

Looking at the industries of the parent companies of global CVCs, ICT sector CVCs accounted for 136, or 27.8% of the total. Companies in finance (22.7%), healthcare (11.9%), energy and chemicals (8.8%), and consumer goods (6.5%) were also actively investing through CVCs.

The average establishment year of global CVCs was 2012. It was analyzed that the establishment of CVCs worldwide has been increasing since 2015. 86.8% of CVCs consist of 10 or fewer members. This is interpreted as forming agile organizations to proactively discover promising companies and invest timely.

The preferred investment sectors of global CVCs included many technology-related fields such as software, TMT (Technology, Media, Telecommunications), SaaS (Software-as-a-Service), IoT (Internet of Things), AI (Artificial Intelligence), big data, fintech, and digital health. Most CVCs secure resources needed as companies grow according to the parent company’s business strategy and technology roadmap through CVC.

Global CVCs have conducted an average of 12.2 deals over the past two years. They are analyzed to hold an average of 24.7 portfolios. From January to October 2020, CVCs conducted an average of 5 deals, and it was found that they continued investing despite the COVID-19 pandemic situation.

Kim Yi-dong, Executive Director of Samjong KPMG Startup Support Center, emphasized, "In the early stages of startups, equity investment through CVC is important, and as rounds progress, it is necessary to seek investors who can provide new synergies and strengthen business relationships with companies."

This content was produced with the assistance of AI translation services.