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Corporate Venturing: The Strategy to Obtain and/or Sustain Leadership in Your Industry

Publicado el April 26, 2021

Publisehd in Tour Innovación 21.04.2021

By Jamie Riggs, Managing Director de ChileGlobal Ventures

Ever since 2020 to this day, the world has been living through complex times leading to constant changes, yet it has also been a period that taught us to find opportunities in these crises to respond to the great challenges we understand that innovation plays a key role.

As per the industries, being aware of the surroundings and recognizing opportunities will lead companies to improve their competitive advantage, and Venture Capital has proven to be a long-term strategy to achieving this goal by working collaboratively with companies and startups.

In this context, the pandemic has made companies understand that some of the answers to their challenges are not within their organizations; they must look beyond and explore the market in search of the solutions that are in development within the entrepreneurial and innovation ecosystems. This is where Corporate Venturing steps in: where a virtuous relationship emerges between companies and startups. The innovation provided by startups can be a differentiating element that increases traditional businesses’ competitiveness.

This is a twofold benefit: on one hand, companies increase their competitiveness by introducing technologies, often disruptive, quickly reaping benefits; and on the other hand, startups validate their solutions, generating commercial traction and scaling their way up by working with corporations.

There is a global ascending trend; in fact, during 2020 the presence of corporations in the startup ecosystem represented a share of 25.5% of all venture capital operations carried out in the United States (www.pitchbook.com). This means that corporations are no longer considered tourist investors that tend to retreat when confronted with adverse circumstances. Venture Capital is being seen as a strategic tool to stay updated and constantly innovating to increase competitiveness.

There are several companies in Chile that have included Corporate Venturing in their business strategy. BHP, BCI, CCU, Entel, CMPC, among others, are clear examples of companies that have seen the benefits from this virtuous relationship between companies and startups.

Success, however, will depend on the capacity of those who carry out and lead this type of process. In addition, it is important identifying the reason for which this type of strategy is carried out. Whether if this is a one-time event or whether it is acknowledged as part of the strategic plan.

In this line, we have been working since 2013 at ChileGlobal Ventures, developing customized corporate venturing programs for our (15) clients, which just during 2020, have captured the interest of more than 1500 startups locally and internationally. In addition, in 2018 we launched CLIN, a private investment fund that seeks to invest in early-stage startups with innovative technologies and high potential to scale up to international markets, focusing on sectors associated with the sustainable use of natural resources. Within its contributors, we have Family Offices and large corporations such as Entel and Engie that decided to include Venture Capital in their strategy.

These efforts are also in addition to what other local players are doing. This is the case of Copec, which created its own VC area (Wind Ventures), and Falabella, that  established an effort to invest US$10 million anually into startups.

Today, although the adoption level of Corporate Venturing in Latin America is still low compared to developed economies, examples such as these are cementing the path of an industry that is expected to have higher levels of development in the region with a clear impact on local economies.

At ChileGlobal Ventures we strongly believe that Corporate Venturing is the vehicle to involve companies in the effort to turn Chile and Latin America into an entrepreneurship and innovation hub, allowing the creation of mutually beneficial and long-term relationships with Chilean and foreign startups.

Jamie Riggs – Managing Director ChileGlobal Ventures