The document discusses corporate venturing and innovation as companies undergo digital transformation. It notes that partnerships are currently the preferred model for implementing digital services over outright acquisitions. Corporate venturing units provide a way for companies to seek innovation through investments, acquisitions, and partnerships with startups. The document analyzes innovation strategies and pain points companies face in areas like strategic direction, deal sourcing and execution, and portfolio support. Top performing corporate venturing units are more focused on strategic goals like technical innovation and opening new markets compared to underperformers.

1. DIGITAL TRANSFORMATION
ACCELERATES THE NEED FOR
INNOVATION
FOCUS ON CORPORATEVENTURING
carlos_j_barrios@hotmail.com

2. CONTENTS
 CONTEXT
 IDENTIFIED PAIN POINTS CHECKLIST

3. INNOVATION BUSINESS MIX
Partnerships
& JV
Corporate
Venturing
In-house
IPR
LICENCING
M&A

4. INNOVATION MANAGEMENT IS THEVEHICLETO SEEKTHE FUEL
THAT IGNITESTHE ROI OF THE DIGITALTRANSFORMATION
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AT&T DT Orange SingTel Telefonica Telstra Verizon Vodafone
Innovation Business Mix forTELCO 2015
In-house Partnership Investment Joint Venture Acquisition Others
 Choosing the right INNOVATION
strategy (knowing when to build, buy or
partner) is key to success in
digital services.
Partnerships are currently, by far, CSPs'
preferred implementation model, with more
than 50% of digital services
implemented this way.
 Outright acquisitions account for
merely 5% of services in CSPs' digital
portfolio, as they are costly and risky.
 The 8 CSPs analyzed have a combined initial
CorporateVenture size of nearly $2
billion, and have invested in more than
210 startups in the past 24 months.
Source: Gartner, 2016

5. CORPORATEVENTURING INNOVATION
DIGITAL TRANSFORMATION DRIVEN
Driven by
performance & ingenuity
Differentiation
through active MANAGEMENT
Value for
parent company
In their effort to innovate, corporations must re-invent the traditional R&D based innovation model with one that augments
these efforts with venture investments, acquisitions, strategic partnerships and startup incubation. CorporateVCs
should play a big role in this innovation quest.

6. PAIN POINTS
 Strategic Direction & Governance
 DEAL flow sourcing
 Deal flow execution
 Portfolio company support & strategic yield

7. STRATEGIC DIRECTION &
GOVERNANCE
What is the CVC Strategic Aim?
Others…………………………………………………..Provide window on new technology
Seek new directions
None, only financial returns
Support existing business
Provide window on new markets
Develop new products
How is your CVC operations measured?
CVCValue Contribution
Portfolio Financial Performance
Activity Metrics
Output Metrics
Portfolio Company Performance
Others…………………………………………………..
Link to
Operational
Capability
Financial
Loose
Strategic
Tight
Corporate Investment Objective
Enabling complements
strategy of current
business
Passive provides
financial returns only
Driving advances of
current business
Emergent allows
exploration of potential
new businesses

8. CORPORATEVENTURING AS DIGITALTRANSFORMATION INTHE ICT &
MEDIA SECTORS BENCHMARK
100%
100%
50%
75%
75%
50%
25%
25%
25%
25%
100%
75%
75%
25%
25%
50%
25%
50%
25%
50%
Technical Innovation
Window of Technology
Business Model Innovation
Open New Markets
Financial interests
Improve Corporate image on innovation
Ecosystem development
Control for Potential future competition
Make us of Non - strategic IP
Promote Corporate Entrepreneurship
Improve Consumer Orientation
Attract and Retain High Potential
Underperformers
Top Performers
WHY CORPORATEVENTURE?

9. CORPORATEVENTURING AS DIGITALTRANSFORMATION INTHE ICT & MEDIA
SECTORS BENCHMARK
LEVEL OF EXTERNAL PARTNER INVOLVEMENT
IN DEAL SOURCING
33%
33%
56%
44%
11%
22%
Top Performer
Underperformer
Medium LowHigh
80%
90%
74%
74%
35%
45%
40%
30%
40%
13%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Strategic & Financial Advice
Research
Sales & Distribution
Marketing
Human Resources Underperformers
Top Performers
EXTERNAL PARTNER CONTRIBUTION

10. DEAL FLOW SOURCING
WHAT ISTHE ORIGIN OFYOUR DEAL FLOW
Other CVCs
Parent Company business unit
IndependentVenture Capital
Angel Investors
Direct Company solicitation
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
DEAL FLOW SATISFACTION
Large ExtendNot at all Small Moderate
WHAT TYPE OF INVESTMENT STAGE
Later stage
Early stage
Seed/Startup
Expansion stage
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
WHAT TYPE OF INVESTMENT STRATEGY
Invest as lead
Invest alone
Invest in Syndicate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
QUANTITY
Large ExtendNot at all Small ModerateOVERALL
Large ExtendNot at all Small ModerateQUALITY

11. DEAL FLOW EXECUTION
Commercial DD on investment Proposal
CVC internal personnel
Parent Company personnel
3rd party consultants
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Financial DD on investment Proposal
CVC internal personnel
Parent Company personnel
3rd party consultants
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
OP/Technical DD on investment Proposal
CVC internal personnel
Parent Company personnel
3rd party consultants
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Financial
model &
valuation Size of financing round
 Investment schedule
 Milestone definition
Valuation Present
Valuation Future
Value definition
Business
Plan
 Investment Proposal
 Science &Technology
 IP Position
 Business Model & Market
 Equity structure
 Competitive situation
 Use of funds
 Management
Investment
Focus fit
Investment focus
 Competitive advantage
 Investment rationale
Pre – screen:
Investment
Document
 Liquidation preferences
 Dividends
 Minority protection rights
 Board composition
Agree on investment
terms
Term Sheet
Translate sheet terms into
legal docs
Shareholder agreement
 Amended constitution
Due
Diligence
Technology , Ops & IP
Audited reports
 Legal
Focus on:

12. PORTFOLIO COMPANY SUPPORT &
MANAGEMENT
Strategic Access to
Access to Parent Co. suppliers
Access to Parent Co. customers
Other…………………………
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Access to Parent Co. partners Large ExtendNot at all Small Moderate
Portfolio Company Support
Engineering support
Scientific support
Other…………………………
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Large ExtendNot at all Small Moderate
Management support Large ExtendNot at all Small Moderate
Marketing support Large ExtendNot at all Small Moderate
Management
Non – voting board member
Voting board member

13. MEDIA & ICT CORPORATEVENTURING
STRATEGIC GOALS BY PERFORMANCE
Seeking Technical Innovation
100%
100%
Open New Markets
25%
75%
Window of Technology
75%
100%
Improve Consumer Orientation
25 %
25%
Business Models Innovation
75%
50%
Financial Interest
50%
67%
Ecosystem Development
25%
50%
underperformer
Top performer