Since 2016, we have constantly discussed investments as Corporate Venture Capital or CVC. We talked about investments and strategic partnership with 800 startups and 60 venture capitals from 29 countries worldwide. Two years have passed, Thailand has entered the knowledge-based economy with Deep Tech as the core driver. Therefore, new strategies are required to keep up with this fast-changing trend.
Recently, Digital Ventures has announced its increased investment of 50 million USD. At the press conference, Paul Polapat Arkkrapridi, Managing Director, Corporate Venture Capital, Digital Ventures and Dr. Arak Sutivong, Senior Executive Vice President, Chief Financial Officer, and Chief Strategy Officer of SCB updated information and investments overviews as well as interesting new strategies of CVC.
Today, allow us to further elaborate on the key takeaways from the press conference.
Updated movements and figures of CVC in the past 5 years.
In the past 5 years, changes have given Corporate Venture Capital a bigger role as an investor for innovation around the world. Paul summarizes the worldwide CVC trend as follow:
- In 2016, there are 965 global corporate investors, an increase of 3-folds.
- 75% of Fortune 100 corporates engaged in CVC and Corporate Investors.
- The portion for investment in startups by CVC is increasing. In 2013-2016, investments increased 20% with the amount of CVC funding increased to 32%.
- Investments in startups increase opportunities to profit. Startups’ patent per dollar is higher than in-house R&D at 3-folds.
Roles and significance of Corporate Venture Capital and tackling disruptive technology
Let’s begin with the meaning of CVC, Paul explains that CVC aims both to profit and acquire strategical benefits for the corporate. Example benefits are the access and right to innovation and technology that can enhance business competitiveness. They can invest directly in startups or via partnered venture capitals. It can be seen that targeting both strategical benefits and profit is what makes CVC unique from other types of investments.
As Disruptive Technology knocks on our doors, CVC’s core function is to support the startup and innovation ecosystem. This is done by encouraging entrepreneurs and innovators from different fields so they can achieve their initial objectives. Backing startups involve high risk, but it is the most efficient and quickest way to tackle Disruptive Technology.
“If corporates don’t take risks to move forward, competitors will use technology to disrupt our business.” – Polapat Arkkrapridi, Managing Director, Corporate Venture Capital, Digital Ventures
Dr. Arak mentions that Digital Ventures is among the first Corporate Venture Capital in Thailand. With its 50 million USD investment, they intend to learn the proper way for VC and CVC to work as well as how to nurture the startup ecosystem. Moreover, they seek to access innovation and innovators to build new products that meet the demands.
New strategies for CVC that will drive innovation in Thailand.
Investment strategies for each CVC differ according to the objectives and industry that the corporate focus on. Mostly, the core strategies are quite similar which are investing with VC to gain access to startups and communities, directly investing with startups that already have products and solutions as well as nurturing local startups to support the ecosystem in their market.
Paul mentioned Digital Ventures’ strategy that they clearly seek to acquire innovation and technology that can support the financial business and Thailand’s economy. Examples are as follow:
- Collaborating with Venture Capital in different regions of the world.
Collaborating with VC helps gain access to strong communities along with opportunities to gain profit. Examples of partnered VC are Golden Gate Ventures, a leading startup funding in South East Asia that focuses on investments in early-stage startups. Nyca Partner, a leading FinTech VC from the USA that houses finance experts from Wall Street and innovation experts from Silicon Valley. Arbor Ventures, a VC from Hong Kong that specializes in FinTech investments covering Asia, Europe, and America.
- Directly investing in local and global startups.
Investing in startups that have the potential to develop innovation to enhance the competitiveness of Thailand and the world. Some examples of the startups that they have invested to support products or solutions for Thailand are Ripple, offering services via the Blockchain, IndoorAtlas, developer of indoor positioning platform from Finland, and 1QBit, a startup who developed a software for Quantum Computing and Quantum Simulator. It can be seen that each startup has interesting technologies that can be used to develop services and structures for the corporate. In Thailand, there are active movements in supports for startups and teams of innovators. Some examples are Digital Ventures Accelerator, currently in its 2nd batch, is an accelerator program for startups in Thailand that seeks innovation in every industry. Also, U.REKA was recently launched. This is an accelerator program for startups in Deep Tech that Digital Ventures collaborated with 7 universities and also the private sector. It will serve as a platform for knowledge from advance research to spin-off as high potential, competitive businesses.
Dr. Arak adds that Digital Ventures’ increased investment to total at 100 million USD is owing to the return that they have acquired through the years. This has made Digital Ventures ready for the next step. They will increase the proportion for direct investment in startups that will not only increase opportunities to profit but will also create close relationships with startups, thus, supporting the ecosystem.
- Expanding investments to Deep Tech, aiming to develop the basis to enhance competitiveness in the knowledge-based economy.
Previously, CVC like Digital Ventures focuses on investments in technology that will support FinTech. However, in the recent strategy, investments in other fields of technology beyond FinTech will help develop the infrastructure for the corporate. Also, it will give Thailand the opportunity to access Deep Technology such as Blockchain, Quantum Computer, Artificial Intelligence etc. Deep Technology is considered to be the core of a country’s development in the knowledge-based economy and has the potential to create change both in the economic and business sectors in the future.
We hope that this blog has provided the current overview of CVC and allow you to see new strategies and preparations before entering the Deep Tech era. We believe that there will be even more collaborations in the near future.