• What kind of funding environment are we in now? • How can startups reach out to suitable investors? • Legal tips for startups receiving corporate funding Organizer: Partners:
H1’19 saw RMB 573B raised in China’s VC/PE market 2009-H1’19 fundraising in China’s early-stage/VC/PE market H1’19 newly raised amount in China’s earlyStage/VC/PE market 1,788.87 ￥573 bn, down YoY 19.4% 3,574 2,970 1,371.21 3,637 1,331.74 2,438 572.96 1,190 784.95 423.15 128.50 124 2009 Amt. raised (RMB, B) 256.79 617 240 2010 No. of new funds 2011 511.80 621 548 217.79 251.45 2012 2013 745 2014 2015 2016 2017 2018 2019H1 Source:
CVCs grows gradually in China and tend to be more generous 2009-2018 CVC investment amount and medium investment amt. in single deal
CVC (Corporate VC) IVC (Institutional VC) Angel Investors "Corporate VCs invest for more strategic reasons, and the return on their investment (IRR) that they are looking for is always nice to have, but not necessarily the key thing that drives their investment. Corporate VCs look at investing in companies both for strategic synergy (cooperation, partnership, and maybe acquisition) and FOMO "fear of missing out" where CVC operates like keeping taps on what's out there in the market."
What kind of startups will be suitable for CVC investments? "B2B is a little more suitable for corporate venture capital. Certain sectors tend to have more active corporate venture capital, e.g. semi conductor (Intel Capital), automotive, healthcare, insurance. Some of these business sectors will be looking at opportunities to invest in startups more so than consumer sectors. In China, we see companies like Tencent and Alibaba invest in both B2B and B2C, a bit more mixed and wider in investment."
Tips on receiving CVC investment • Mind the timeline for fund raising. Slow decision-making process and slower if the decision flows back to the head-quarter. • CVC tends to co-invest instead of leading the investment or the 1st professional money investment for a startup. • CVC gets funding from company budget. Their strategy and funding depend on year-to-year budget, direction and economic status of the company. • Ideally, you (startup) want CVC coming after you. If to look out, startups may seek CVC through the network of your existing angel investor or IVC. • Investment terms will be different as what a corporate venture capital investor asks for.
Startup-Corporate Open Collaboration "Corporate open collaboration programs are not only looking for market idea and market innovation, but also good in bringing their staff and team to work with young dynamic startup founders. From the startup perspective, they may get great relationship, and access to what the corporate is seeing in the market place. The programs are relatively open, but be a bit cautious on who owns the IP in the collaboration and the corporate's access right to the information when it comes to investment terms. Most corporate VCs are less restrictive in terms and more so in the open collaboration programs. But as a startup, when you work with companies that are much bigger than you, just be careful to read the terms and conditions, and understand the relationship that you are getting into."
1. You mentioned about IP. Does startup have any bargain power, or only following the corporate rules? 2. We are not really a startup (15 years history) but we have some of the characteristics of a startup, in particular new highly innovative technology products with vast commercial potential in China and abroad. Do you see a trend, in the current crisis, for investors to show interest in more mature, proven, companies? In order to better assess our value to investors, do you think we should actively seek other type of potential investors, such as VCs and IT companies? 3. What are Chinese investors cautious about when working with foreign startups? 4. How long does it take for the negotiations from starting the conversation with corporate VC and finally getting the money? 5. You talked about valuation and risk management between CVC and IVC. How do they differ in terms of control terms they demand, board seats, veto, etc. 6. Do you feel Chinese corporate investors are similar to multi-national investors? It's quite new in China. 7. What other benefits could startup consider seeking beyond capital from CVC? 8. I'm an MBA student with my thesis on CVC. I'm wondering if startups should be wary of investment from CVC, since CVC might not be interested in the startup but its technology? 9. Is there a difference in valuation when it comes to IVC and CVC? Does CVC strategy on average get a discount on the investment because they can bring strategic value. How do you see the future of CVC industry in China? Check out Art’s answers at https://v.qq.com/x/page/y3103883p6d.html
谢谢 Startup Accelerator Corporate Innovation Co-working Space Shanghai Singapore Eindhoven Tokyo Ian Yu XNode Acceleration Manager thexnode.com/blog firstname.lastname@example.org linkedin.com/showcase/xnode-startups