CVC Strategy: Lessons from 2020, Strategic Considerations for 2021 - DLA Piper
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CVC Strategy: Lessons from 2020,
Strategic Considerations for 2021
1
Working with DLA Piper at a glance
• Working with DLA Piper’s Corporate Venture group brings several benefits to our clients:
• Capacity: Corporate venture capital deals frequently involve short deadlines – due to the large number of partners
and associates who routinely work on transactions, we can ensure that the necessary resources are available for our
clients
• Integrated Approach with full scope of legal disciplines to support transactions: Our success in supporting
clients in corporate venture capital transactions is underpinned by market leading tax, intellectual property and
technology, labor and employment, data privacy and security, and regulatory specialists who are deployed when their
expertise is required
• Large international network: DLA Piper is one of the few international legal service providers with access to a large
international network of corporate venture capital legal advisors and the support of 4,300+ lawyers in more than 90
offices in over 40 countries
• Local contacts: Instead of coordinating with different legal advisors, our clients will have a bi-coastal team of US-
based corporate venture capital partners as responsible contacts who will coordinate a transaction project on a
national or international level which saves time and brings efficiency to the process
• Expertise: Our lawyers have extensive know how executing complex corporate venture capital transactions and can
bring the experience of many projects and transactions with them
• DLA has the leading corporate venture practice, Global Corporate Venturing
• DLA ranked #1 Global M&A deal volume in 2020 for the eleventh consecutive year, Mergermarket
www.dlapiper.com 2
Corporate Venture Recognition
• In the past three years, completed over 2100 deals, totaling over US$31 billion • Twice named the "Legal Firm of
the Year“ (Global Corporate
• We advise investors and companies on 800+ venture and debt financings Venturing)
annually and have deep experience working with corporate venture funds on • The only law firm to rank in the
investments, commercial agreements, acquisitions and disposals top five for M&A, Private Equity
and Venture Capital (PitchBook)
• We are active in global markets on behalf of our clients every day and
routinely execute a large volume of complex venture transactions, • #1 law firm advisor to investors
allowing us to provide clients with: (PitchBook)
• Efficient, cost-effective service regardless of the size of the deal • Recognized – Nationwide:
Startups & Emerging Companies
• A highly integrated and skilled team, from senior partners to
(Chambers USA 2019)
experienced associates, who are conversant in a variety of legal
disciplines • Recognized as the 2nd global elite
law firm brand in the Acritas US
• Thought leadership and training on structures, trends and best practices
Law Firm Brand Index 2020
in corporate venture
• Relationships and insight by leveraging the collective knowledge and
contacts of DLA Piper’s lawyers in offices throughout the world
www.dlapiper.com 3
Representative Corporate Venture Clients www.dlapiper.com 4
Representative Corporate Venture Transactions
Series C investment Series 6 financing of Series A-3 and Series Series B financing of Series B investment
in Limelight Health Proterra, Inc. A-4 financings of Serviz, Inc. in Helium Systems,
CollabIP, Inc. (dba Inc.
Tethr)
Series E investment $18 million Series B Series A financing of Series A Preferred Series B financing of
in DocuSign investment into Suja Life, LLC Stock financing of ARC Holdings
Skyera, Inc. Keemotion, Inc.
Series A financing of Series E Preferred Series C Preferred Financing of Libre Series E financing of
Stanson Health, Inc. Stock financing of Stock financing of Wireless Guardant Health
BORQS Ltd. Matterport, Inc. Technologies, Inc.
www.dlapiper.com 5
Corporate Venture: One Tool in the Innovation Tool Kit
• Corporate venture capital
• Investment/engagement with accelerators and other startup programs
• Collaboration with other corporations
• Open source software foundations: OpenStack Foundation/OpenMAMA
• Industry collaborations
• Internal projects/entrepreneurship
• Internal projects for internal use
• Process for spinning out “on the shelf” technologies
• Use startup methodologies such as “lean startup” (adopted by GE)
• M&A
• Digital transition to integrate new technologies more swiftly
www.dlapiper.com 6
Corporate Venture: Strategic Alliances to Serve Innovation
Needs of Corporations
Innovation M&A
M&A
Corporate Venture Capital
Incubation
Innovation
Integrated
Commercial Piloting
Corporate
R&D
Venturing
Innovation Center of Excellence
Corporate Innovation
Innovation Partnering
Incubation, Commercial Piloting
JV and Strategic
Licensing Alliances
www.dlapiper.com 7
Why do Corporate Venturing?
Create a channel to stay current on
Optimize your current business by Drive your company into adjacent and
emerging trends and technologies –
leveraging the speed, agility, and new markers using a portfolio staying up to speed on the “art of the
possible.”
innovations of startups. approach by placing a series of small
bets.
www.dlapiper.com 8Options for Corporate Venturing.
Design, launch, and manage world-class CVC Funds leveraging the experience, deal flow,
global network, and success of our top-tier Silicon Valley VCs.
Support Executive Investment Committees without a CVC, who are investing off the
balance sheet — bringing the discipline, portfolio mindset, metrics, and best practices
needed to drive meaningful growth.
Adopt best-in-class methods for partnering with and leveraging external startups to drive
maximum value and innovation across the core business.
www.dlapiper.com 92020 in Context
“There has been more innovation in the last six
months than in the last six years”
Mohanbir Sawhney, professor at the Kellogg School
of Management at Northwestern University
www.dlapiper.com 102020 Trends
• Remote working
• Rethinking workforce management
• Move to the cloud
• New business models
• Telehealth
• eLearning
• DeFi
www.dlapiper.com 11Global Venture Capital Transactions www.dlapiper.com 12
Global CVC Transactions www.dlapiper.com 13
Global VC Transactions by Industry www.dlapiper.com 14
Global CVC Transactions by Industry
$160.00B
$140.00B
$120.00B
$100.00B Materials and Resources
Information Technology
$80.00B Healthcare
Financial Services
$60.00B
Energy
(B2C)
$40.00B
(B2B)
$20.00B
$0.00M
2016 2017 2018 2019 2020 2021
Source: PitchBook Data, Inc.
www.dlapiper.com 15Global Venture Capital Transactions by Round www.dlapiper.com 16
Global CVC Transactions by Round
100%
Angel
90% 19th Round
80% 16th Round
15th Round
70%
14th Round
60% 13th Round
12th Round
50%
11th Round
40% 10th Round
30% 9th Round
8th Round
20%
7th Round
10% 6th Round
5th Round
0%
2016 2017 2018 2019 2020 2021 4th Round
3rd Round
Source: PitchBook Data, Inc.
www.dlapiper.com 172021 Technology Trends (Gartner) • Internet of Behaviors • Total Experience • Privacy Enhancing Computation • Distributed Cloud • Anywhere Operations • Cybersecurity Mesh • Intelligent Composable Business • AI Engineering • Hyperautomation www.dlapiper.com 18
The key is to create actionable objectives.
DEVELOP A Drive growth with fast access to
innovation. Be credible towards startups and top VCs
PORTFOLIO AND / CVCs
PIPELINE OF NEW
VENTURES
SCALE LEARNING Develop a sensor network to stay current on
emerging trends and technologies to channel back to
ACROSS THE the Mothership.
MOTHERSHIP
DEVELOP SPEED AND Make small bets, fail fast, maximize learning. Not
judged on individual investment, but portfolio quality.
AGILITY
MOVE THE NEEDLE Deliver meaningful financial results, new revenues,
startup equity, better-informed M&A
www.dlapiper.com 19Here’s a starting list of what startups and VCs need. Access to Customers Market Knowledge Brand Validation Channel Partners Operating Expertise Last and Least - Capital www.dlapiper.com 20
How your CVC fund will win in 2021
Build Hybrid Team Sense of
Network Skillset Location Matters Stability Urgency
Build a solid and Combine the skills and While the Silicon Valley Scout a team of Sense of urgency and
extensive internal network of a company is the oldest and competent innovation flexibility in decision-
innovation veteran with deep knowledge deepest startup and investment making from the
network over 2 of company core ecosystem in the world, professionals. investment committee.
years to generate competencies, assets, other global innovation
deal flow and capabilities, and business with hubs are important to EIRs with deep Silicon Make small bets, fail
accelerate a Venture Capital veteran with monitor. Valley connections. fast, maximize learning.
startups. Silicon Valley (and / or global
ecosystem) networks, insider Senior leader who can
access, and deal-making navigate the
experience. Mothership, incentivized
to slay for the long term.
Report to Investment Mothership Product-
CxO Commitment Management Reciprocity Market Fit
Reporting to CxO Commit to incubate new Good working Learn and adopt the Leverage Silicon Valley
will accelerate business models and invest relationships with "pay-it-forward" best practices to deeply
your efforts. selectively in startups. individuals throughout approach of working understand customers
R&D, CFO, and Not a blind cash pool. Agile the organization: within the ecosystem. and consumers.
others as and responsive. brands, marketing,
advisors as R&D. Understand the needs Stay relevant and
needed 24 to 48-hour decisions on of all of our current on trends,
investments — no obstacles Internal communication stakeholders in order to technologies, and
to moving fast. to understand needs, maximize success for business models.
share learning, and the CVC and the
generate a win-win Mothership.
relationship.
www.dlapiper.com 21New Initiatives in Corporate Venturing www.dlapiper.com 22
Where Global Innovation and Capital Meet www.dlapiper.com 23
Global Corporate Venturing
Information
News on the latest deals, people, companies, and firms investing in the private
‘ Through our
platform, we
markets
provide the world’s
Insights investors and the
Quantitative and qualitative data on investment activity and the latest trends along wider innovation
with leading industry perspectives and best-practices with a focus on strategy,
operations, deal sourcing, portfolio support, talent, recruitment and professional ecosystem with the
development
information,
Access insights and
Connect and build relationships with a global network of peers, co-investors, access needed to
entrepreneurs, LPs and technology decision-makers. Elevate thought leadership
by disseminating original content on GCV owned publications or speaking at GCV succeed in a
conferences
constantly
changing world
’
www.dlapiper.com 24Global Innovation Venturing Initiative Chaired by Scott Sandell, General Partner of NEA, Global Innovation Venturing brings together various sources of capital under one banner to help support entrepreneurs, foster innovation and advance the progress of start-up companies. Members include CVCs, VCs, LPs, Family Offices, Angel Investors and others within the venture capital ecosystem. GIV is a division of Global Corporate Venturing (GCV) which provides news and data on venture deals, with connections to more than 10,000 corporate investors worldwide. By collaborating with other parts of the venture community, member portfolio companies will benefit as they search for capital, customers, product development, hiring and eventually, an exit. For more information contact: janicemawson@globalcorporateventuring.com www.dlapiper.com 25
THE FIRST SPECIALIZED INSTITUTE DEDICATED TO CORPORATE VENTURING INDUSTRY ADVANCEMENT, STAYING POWER AND IMPACT Actionable professional development and certification, rigorous research, and community building www.dlapiper.com
Institute Advisory Board www.dlapiper.com 27
Institute Curriculum Roadmap
The Essentials
CV Common Language & CVC Essentials
CV Essentials for Enterprise
Context (For new CV programs)
Q2, 2021 Q2, 2021
Deep Dives
CV Professional Development &
Landing the Value of High Performance Strategic
Certification
Corporate Venturing (CVBD) Investing (CVC)
Q2 & Q4, 2021
Hot Topics Legal Topics:
CV program CV portfolio &
CV Continuing Education Board & Observer CV HR & incentive
marketing & performance
Term sheets, IP, programs
community building management
Exits…
Institute Community – Alumni Communities of Practice, Mentors, Experts
www.dlapiper.com 28The Corporate Venturing Program Landscape www.dlapiper.com 29
Contact us for more information or to register • gcvinstitute.com • info@gcvinstitute.com www.dlapiper.com 30
Global Reach
DLA Piper presence
Cooperation firm
• National and international coverage to meet the demands of a fast-evolving, increasingly global environment and to reduce
coordination risks
• With lawyers located throughout the globe —including the U.S., Canada, Latin America, the Middle East, Africa, and Asia Pacific,
DLA Piper is positioned to provide clients with guidance from anywhere in the world
• Ranked by Law360 as the #1 Global Law Firm based on global breadth and complexity of the firm’s cross-border work
• 4,300+ lawyers in more than 90 offices in over 40 countries
• Coverage in 20+ additional countries through DLA Piper Relationship and Focus firms
*Cooperation Firm
www.dlapiper.com 31Mark F. Radcliffe
Mark Radcliffe is a partner in the Silicon Valley office of DLA Piper. Mark’s practice
focuses on representing corporations in their intellectual property and finance matters. In
his thirty years practicing law in Silicon Valley, he has worked with a wide variety of
companies from emerging growth companies such as Tarana Wireless, Bulletproof360,
Netratings, Lightbend and Magnum Semiconductor, Inc. to larger companies such as
Hewlett Packard Enterprise Company, Sony Corporation, Siemens Corporation, Sun
Microsystems, Inc. and Hitachi, Ltd.
Mark Radcliffe
Mark is the Chair of DLA’s Corporate Venture Practice Group which represents many Partner
global Fortune 100 companies in their venture capital transactions. The Corporate T: +1 650 833 2266
Venture Practice Group also has developed a training program of four modules mark.radcliffe@dlapiper.com
particularly designed for corporate venture capitalist and which has been presented to
over fifteen corporate venture groups. Mark is a regular speaker on venture capital, Silicon Valley Office
particularly corporate venture capital. 2000 University Avenue
East Palo Alto, California 94303
In 1997, the National Law Journal cited him as one of America’s 100 most influential
lawyers. The San Francisco Business Times has named him among the best lawyers in
the San Francisco Bay area. Leading international legal publishers consistently rank Mr.
Radcliffe among the top lawyers in his profession. The respected English publishers
Chambers and Partners has repeatedly named him in Chambers USA: America’s
Leading Lawyers for Business, and has described him as “outstanding” and “a leader in
open source-related matters.” Legal 500 also recognizes him, commenting: “His expertise
in providing strategic IP advice, with particular specialism in open-source matters, has
won him plaudits. Indeed, one client describes him as ‘probably the best lawyer in his
field.’” In 2009, 2010, 2011, 2012 and 2013 Intellectual Asset magazine named him
among the “IAM 250 - The World’s Leading IP Strategists.” In 2014 and 2015 Intellectual
Asset magazine named him among the “IAM 1000 - The World’s Leading Patent
Practitioners.” In January, 2013, he was appointed by the Department of State as the
Private Sector Co Chair of the US Japan Innovation and Entrepreneurship Council. He
earned a B.S. in Chemistry magna cum laude from the University of Michigan and a J.D.
from Harvard Law School.
www.dlapiper.com 32Paul Holland A successful veteran of Silicon Valley, Paul Holland is Managing Director and VC-in- Residence at Mach49, where he leads the company’s Corporate Venture Investing Practice. Paul works with global businesses to design, launch, and manage CVC Funds that leverage the experience, deal flow, global network, and success of his team of top- tier Silicon Valley VCs. Paul supports Executive Investment Committees, bringing the discipline, portfolio mindset, metrics, and best practices needed to drive meaningful growth. He also teaches clients best-in-class methods for partnering with and leveraging Paul Holland external startups to drive maximum value and innovation across the core business. paul@mach49.com Paul has been a General Partner at leading venture capital fund, Foundation Capital, for 18 years helping take startup companies from zero to $100M to IPO or acquisition. He enjoys being on the front lines—working side-by-side with entrepreneurs developing fast- growing, dynamic new ventures—experience he is also bringing to support Mach49’s work helping large companies build their own disruptive ventures. Prior to joining Foundation, he had an equally stellar operating career, joining Reed Hastings at Pure Software, ultimately running Europe, Middle East, and Africa and helping Pure have one of the hottest IPOs of that vintage. He was later recruited by Benchmark Capital to join Mark Gainey at Kana Communications as its first C-suite executive to help Kana grow quickly and go public, ultimately attaining a $9B market cap. In total, Paul helped generate over $13B in market capitalization during his operating career. Paul began his career at SRI International, where, as he likes to tell his kids, he was a “human Google,” conducting inquiries on a broad variety of topics for global businesses. He received his MBA from UC Berkeley, MA from University of Virginia, and BS from James Madison University. Paul is a former president of the Western Association of Venture Capitalists, and he is the producer of the documentary Something Ventured, about the early days of the Silicon Valley. He premiered his newest creative endeavor for the stage: Walls: An American Story in January 2020. He has guest lectured on entrepreneurship at Stanford, Harvard, Dartmouth, MIT, University of Virginia, and James Madison University. www.dlapiper.com 33
Corporate Venture: Training Programs
1. Term Sheets for Corporate Investors. This presentation is designed to assist corporate investors to understand how venture
capital term sheets operate with particular emphasis on special issues for corporate investors. The presentation is based on
model Series A and Series B term sheets.
Time: 60 minutes
2. Best Practices for Board Observers and Board Members for a Private Technology Company. This presentation is
designed to train individuals to serve as observers or members of the board of private technology companies and is available in
person. The presentation can be of value both for the experienced corporate investor and the new corporate investor. It focuses
on the legal and practical aspects of service as a board observer and board member. The presentation uses a PowerPoint
presentation and provides substantial materials: six memorandums (Basic Fiduciary Duties, Duties upon a Merger, Duties in a
Spinout, Duties upon Insolvency, Intellectual Property, Critical Issues and Patent Prosecution Strategy) and a Summary of Best
Practices.
Time: 240 minutes
3. Term Sheets for Corporate Investors. This presentation is designed to assist corporate investors to understand how venture
capital term sheets operate with particular emphasis on special issues for corporate investors. The presentation is based on
model Series A and Series B term sheets.
Time: 60 minutes
4. Developing and Managing Intellectual Property Strategy for Portfolio Companies. This presentation is designed to train
investors to assist in the development and management of intellectual property strategy for their portfolio companies which
matches their business strategy. Intellectual property has become critical to protecting a company’s business and building value
for a merger. The sale of the Friendster patents for $40 million and the purchase of Motorola Mobility for $12.5 billion have
emphasized the importance of intellectual property. The presentation will describe basic forms of intellectual property, comm on
mistakes made by startups and successful strategies of companies and startups. And the presentation will address the concerns
of acquiring companies and the strategies to ensure the highest possible value for a startup in an acquisition.
Time: 90 minutes
www.dlapiper.com 34Representative M&A Clients www.dlapiper.com 35
Representative M&A Transactions
Acquisition of Acquisition of Joint venture with
Joint venture with Represent Centerplate Acquisition of Sigma Thunderbird School
TDK International Inc. US$675 million Designs, Inc. of Management
US$71 million $US282 million US$102 million
Acquisition of assets Acquisition of NXP Acquisition of Peet’s
from Nesscap Semiconductors N.V. Coffee & Tea Majority ownership Acquisition of Dragon
Energy, Inc. (CVE: US$47 billion US$ 1 billion joint venture with Innovation
NCE) Hagie Manufacturing
US$23 million
www.dlapiper.com 36Transactional Tax Recognition
• Named among the world’s
leading international tax advisors
• Market leader for innovative, tax efficient structuring of business and transfer pricing advisers
transactions and resolution of significant tax controversies globally (World Tax and World
Transfer Pricing 2019)
• With more than 300 tax lawyers and economists, our global tax advisory group
helps clients address the complexities of international commerce and • Named among the world’s
operational challenges, and avoid, manage and/or resolve tax disputes leading transfer pricing practice
globally (World Transfer Pricing
• Our global tax group works alongside our corporate venture and M&A teams 2019)
and is positioned to assist clients in efficient tax structuring on venture • Los Angeles Firm of the Year
investments and corporate acquisitions and disposals including: (International Tax Review 2018)
• choice of entity to achieve the best tax and business objectives • Americas Consumer Products
• utilization of tax attributes Tax Group of the Year
(International Tax Review 2018)
• structuring and implementing financings
• Americas Private Equity Tax Deal
• optimum structures for facilitating exit strategies of the Year (International Tax
• tax-efficient compensation and incentive awards Review 2018)
• Globally ranked in Chambers and
Partners Ranked in Legal500
www.dlapiper.com 37Intellectual Property & Technology Recognition
• Named one of the Best of the
Best IP Law Firms in IP
• Recognized worldwide by legal directories and industry members as one of the Litigation – BTI Litigation
leading groups of its kind Outlook
• Our Intellectual Property and Technology (IPT) practice includes nearly 500 • Recognized as the second
most active patent practice in
dedicated lawyers in more than 24 countries, with particular strength in key
the last ten years among
global markets national firms by Law 360
(2020)
• We are one of the most widely recognized providers of a full range of
commercial, intellectual property, privacy, licensing, sourcing and technology • IAOP Global 100 –
law services for leading businesses worldwide One of the World’s Best
Outsourcing Advisors in 2020
• Our IPT practice works alongside our corporate venture and M&A teams and is (fifth year in a row)
positioned to assist clients with a range of IP related matters including: • Highly ranked among the top
• licensing, sale, acquisition and financing of IP rights firms nationwide as a leading
IP and ITC practice in the US,
• guidance on intellectual property-oriented M&A considerations; including and a leading IP firm globally
the transfer of IP – Chambers USA and
• technology and licensing matters that arise in the context of strategic Chambers Global (2020)
ventures and other complex commercial transactions
www.dlapiper.com 38Thank you All information, content, and materials contained in this publication/program are for informational purposes only. This publication/program is intended to be a general overview of the subjects discussed and does not create a lawyer-client relationship. Statements and opinions are those of the individual speakers, authors, and participants and do not necessarily reflect the policies or opinions of DLA Piper LLP (US). The information contained in this publication/program is not, and should not be used as, a substitute for legal advice. No reader should act, or refrai n from acting, with respect to any particular legal matter on the basis of this publication/program and should seek legal advice from counsel in the relevant jurisdiction. This publication and the program may qualify as “Lawyer Advertising,” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome. DLA Piper LLP (US) accepts no responsibility for any actions taken or not taken as a result of this publication/program.
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