Friday, January 31, 2014

CED Demonstrates New Extended Reach for Growth Companies with Corporate VC Spotlight; Thanks NC IDEA for $250,000 Vote of Confidence

Last night, CED held its annual meeting at the beautiful offices of Bronto Software on the American Underground campus. It was the organization’s opportunity to discuss the big steps taken over the last year and begin to paint the picture of what the next year will look like for the Durham-based non-profit.

At the top of the gathering, CED’s president Joan Siefert Rose thanked NC IDEA for its vote of confidence, as reflected in the newly awarded $250,000 grant. She suggested that this will help CED do more to make sure that entrepreneurial companies do more than just ‘start’ – that they grow and succeed.

One of the organization’s first initiatives will be to build and information bank of companies, mentors and investors both inside and outside the Triangle. The objective, according to Rose, is to “make smart connections with the right people at the right time, to help transform a company’s chance for success – and CED will be adding new skill sets and technology to entrepreneurs a better platform to do just that.”

It was great to hear from two companies’ founders, who then came up to the microphone to talk about how CED had impacted their growth. Bronto co-founder Chaz Felix welcomed us to the facility and told great stories about their current success but also shared early photos of their first six months and their exhibit at CED’s conference. Matt Williamson of Windsor Circle then updated us on their growth, but focused more on their start – and the key role played by CED, even today.

The Re-Emergence of Corporate Venture
Our guest speakers came from San Francisco, New Jersey and Pennsylvania to help make connections and provide insight into the state of corporate venture.

Mary Dent, founder of dcIQ and former general counsel and vice president for public policy of Silicon Valley Bank, lead a panel discussion about Corporate Venture and the role it plays in the success of growth companies. She began by pointing out that there’s a consistent funding gap between market requirements and the capability of traditional venture capital to fill that gap. Indeed – the $50 Billion shortfall in 2012 is nothing compared to the estimated $80 Billion shortfall in 2018.

It’s cheap to start a company, frankly,” said Dent. “But it’s expensive to scale and yet harder to get that investment to help you scale. Most companies peak and die – or become less relevant.”

So where’s a growing company to go? She pointed out that for a great many companies that do have lots of capital, they’re not increasing their R&D, nor are they expanding dividends. Most are just waiting. The smart ones are investing. But there’s a shift in philosophy on how to use Corp venture... and she introduced two Corporate Venture Capitalists to explain.

Dan Keoppl, Executive Director, Verizon Ventures joined David Zilberman, Venture Partner with Comcast Ventures, to give us an overview of what they see, how things are changing, and what growth companies need to know about how to work with them.

What are we looking for?

  • How far ahead of competition the company is.
  • A company that can articulate, clearly, what the market opportunity is.
  • Revolutionary business: how is this company going to change its industry?
  • Is this a new market for the investor? It must be a strategic investment…  come understanding what that means.
  • Can the corporate VC provide operational linkage and value? The money isn’t enough – it’s about the operating relationship. What should ventures do to get investor’s attention?
  • Brute force networking. Nothing beats relationships.

What ventures should NOT do?

  • Don't send blind LinkedIn message; don’t send a ‘general email’ form the website.
  • Get a warm introduction! It is the first step in proving your sophistication.

What else should companies know?

  • Corporate venture’s ability to invest is on par with any other VC, but “we are unprecedented in term s of helping you."
  • We often range from $ 6-8M investment – generally.
  • We’re not a very early stage investor. You have to be big enough to deal with a company the size of Verizon (in this case) and not get overwhelmed.
  • Verizon says: Don’t go to your corporate investor with things like hiring queries… use them for their ability to help you navigate within their corporation.
  • Comcast says: We get you access like you can't get elsewhere… maybe even the Today Show.
  • Angel investments can be great – but can also tie your hands later if there’s too much ownership. Go to angel money that’s mature so that your valuations are not “out of whack.”
  • If you’re not ready take this step – hold on. Wait and see how things develop. Spend your time building your network.
  • Recent research shows that having corporate venture can increase your market cap, increase your revenue.

The big take-away? 
It’s the network. It’s all about the network. So that’s what we did next – gathered to socialize and celebrate the year for CED.

Thanks to Silicon Valley Bank for their help in bringing these guests to Durham, and to Bronto for hosting!

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