State of Corporate Venturing

Thomas Grota, Investment Director at Deutsche Telekom AG

While CVC deal number increases... • General Motors, under pressure from Ford, Google, Apple, Uber and just about

every other big company doing something car-related, made a $500 million investment in Lyft this week. The deal includes a partnership that will focus on developing a car-hailing service using autonomous driving technology.

• Pharmaceutical giant Roche led a $175 million in Flatiron Health, the biotech startup that sells software related to cancer treatment. Allen & Company, Baillie Gifford and Casdin Capital also kicked in for this latest round; previous investors include Google Ventures and First Round Capital

• UPS led a $28 million funding round for the same-day delivery startup Deliv. Other investors included Upfront Ventures, RPM Ventures, General Growth Properties and Simon Property Group (Wall Street Journal).

• Struggling $10 billion grocery chain Whole Foods is leading an unknown sized investment in the $2 billion grocery delivery startup Instacart, and the two are inking an exclusive five-year delivery partnership.

... there is Winter in Silicon Valley

4

Venture Capital is a tough and risky Business.

55% of US investments are written off

0 5

10 15 20 25 30 35 40 45 50

x<0.5 0.5<x<1 x=1 1<x<2 2<x<5 x>5

% Cost % Value

62% of EU investments are written off

0

10

20

30

40

50

60

x<0.5 0.5<x<1 x=1 1<x<2 2<x<5 x>5

% Cost % Value

Entrepreneurs need less capital to start … Thanks to cloud, viral marketing via social & easy payment.

4.000.000 €

400.000 €

40.000 € 4.000 €

1995 2005 2010 2014

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art a

n IT

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Technology Drivers

Open Source

Cloud + AWS

Developers Start Companies

99% cost reduction

0,2 0,4 0,8 4,3

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Cisco Amazon Microsoft LinkedIn Twitter facebook Alibaba

Private investor capture gains today

Previous Tech Cycle

Current market cap: $133B+ $261B+ $405B+

$15B+

$13B+

$307B+ $163B+

New Tech Cycle

Market Capitalization at IPO ($B) vs. current

*) Data from Q1 2016.

104 150

Companies see the Pre-IPO Dip Va

luat

ion

Time

Financing rounds

IPO (same for trade sales)

indicative

fb: $304bn

box: $1.39bn

sq: $3.37bn

+214%

-28%

-42%

Negative Outlook creates Impact

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So the Markets have changed – and so did VCs.

Late stage financing produces lofty valuations

Seed Stage Early Stage Later Stage

Larger Later stage rounds after

validation

More seed rounds as costs decline & sources of capital increase

Traditional VC

Today’s VC

Valuation Better equity position for early stage investors and founders

competitive areas (Big funds needed)

… When a concept works the competition is fierce.

Private Investors have different Goals 500 Startups, Y Combinator

Seedcamp, Startupbootcamp @500: ca. 900 invests, 50 exits, 3 unicorns @seedc: 240 invests, 12 exits, 0 unicorns

Accel, Index, Bessemer, KPCB, Sequoia, A16Z, Fidelity, Highland, Kinevik, Global Founders, RI

IPOs, Unicorns, 1000+ investments

Salesforce, Intel, Samsung, SAP, Google Ventures

“The good, the bad, the ugly…”

Alphabet Capital, facebook, SoftBank, Elan Musk, ... “Big Bets on Moonshots”

Seed Stage Late stage

1x

8x

2x

na

Where business runs Everywhere on…

Telco's life in a complex World

Fast Secure ubiquitous

Networks

Telco’s Chance to benefit

Partnering & Venturing

Contents & Advertising

Social Networks

Security Platforms

Connected Computing

Opportunities of Venturing

Opportunities of Partnering

IoT & 5G Cyber / Privacy

Big Data Messaging

The way for Corporate Investors

• More corporations need to invest & partner

• Many bets on small ideas is good Marketing

• Big bets on “close to core” businesses need focus

• CVC funds are nice to have - but less efficient

• Investments from balance sheet is the way to go

Like Startups – VCs are risking to burn $$$ of LPs…

… but in CVC the Corporation will feel the impact!

Thomas Grota Twitter @thomasgr