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1、September 2024Prescient funds will stay aware of their dependency and successfully manage the risk of dormancy through educating corporate sponsors on the important role of venture.”We are pleased to present the fourth edition of this report,capturing trends across the industry over time.The report

2、draws on the most extensive survey of the CVC ecosystem one in four active CVCs responded.With this broad industry perspective,we can say that corporate venture capital has not shied away from the innovation economy despite the prolonged industry-wide venture capital(VC)slowdown.Participation rates

3、the percent of VC deals that CVCs are a part of remain near all-time highs as CVCs continue to invest.They appreciate that the pace of technological innovation is not slowing and are eager to understand and invest in emerging areas like generative AI(GenAI)and climate tech.With a key role as an orga

4、nizations sensor function,CVCs have never been more important.Still,CVCs are not immune to the industry-wide downturn.As the macro environment remains slow,more funds are making fewer investments.The risk of dormancy among some funds remains present in a slow market where exits and strategic outcome

5、s are fewer.It is up to CVC leaders to guide the parents through this market,in which timelines to realize financial or strategic returns are often elongated.Educating corporate sponsors can be challenging,especially for new funds that report the lowest levels of excitement among executives.This yea

6、r we analyzed the differences among mature and newbie CVCs.What we gleaned is that prescient funds will stay aware of their dependency and successfully manage the risks of dormancy through educating corporate sponsors on the important role of venture and the value that CVCs bring to the organization

7、.We see a clear road map plotted by mature CVCs:Successful funds educate executive sponsors and grow increasingly independent and more sophisticated.As the CVC industry continues to develop,so too will funds mature.We remain optimistic for the future and look forward to continuing to support the CVC

8、 ecosystem in the coming year.Patrick EggenGeneral PartnerCounterpart VenturesMark GallagherCo-Head of Investor CoverageSilicon Valley BankSTATE OF CVC 202422024 CVC Survey Key FindingsMarket OverviewMandate and Managing DependencyInvestment ApproachTeam Dynamics AppendixSTATE OF CVC 20243STATE OF C

9、VC 20244Source:CVC survey,PitchBook Data,Inc.and SVB analysis.Exec sponsors enthusiasm for CVC is tied to their understanding of the VC asset class in general.Financial CVCs enjoy the highest level of enthusiasm from exec sponsors;newbies have the least.This could be driven by level of exec knowledg

10、e of the venture asset class.Newbies are more likely to think that execs lack understanding of VC and its norms,often due to unrealistic timelines or return expectations.CVCs use the corporate parents logo to win deals.Surprisingly,one-third of financial CVCs rely on the parents logo to win deals,co

11、mpared to nearly two-thirds of strategic CVCs.While some CVCs cant offer the extensive capital and support of a top-tier VC fund,they can provide technical expertise and a path to commercial partnerships with the parent.CVCs continue to take their foot off the gas.The risk of dormancy among some fun

12、ds remains present in a slow market where exits and strategic outcomes are fewer.Thirty-eight percent of CVC funds made fewer than five investments in the last year,up from 25%in 2022.However,CVC participation rates as a percentage of all VC deals remain near all-time highs.Leading deals is becoming

13、 less common,especially for younger funds.New CVCs saw a 23-point drop in the percentage of funds that lead deals since 2021.For mature CVCs,however,74%reported leading deals,down just nine percentage points from 2021.While 90%of bellwethers still lead deals down just five points from 2021 lower lev

14、els of deal leadership are seen across the board.Growing scrutiny from corporate parents.The last four years of data show a trend toward generally greater scrutiny for example,the percentage of funds that can skip investment committee(IC)review below a certain investment threshold fell from 38%in 20

15、21 to just 19%in 2024.STATE OF CVC 2024533%33%42%47%50%48%32%38%17%19%26%15%202120222023202450%38%12%14%33%24%14%11%4%Strategic(13)Financial(810)Hybrid(47)StrategicHybridFinancialNotes:1)PitchBook Data,Inc.as of 9/5/2024.Active is defined as having made at least two deals over the last 12 months.2)B

16、ased on survey question.Firms were asked if they are focused on strategic or financial returns.Firms self-report on a scale from 1-10.3)Firms self-report one of three maturity options not based on firm age.Source:CVC survey,PitchBook Data,Inc.and SVB analysis.257 representing 27%of all active global

17、 CVCs,up from 209 last year1$11B in annual investment8,000 active companies in their portfolios$500M+AUMFund Sizein CVC CommunityReputation$100M+per YearDeploymentWhile individual firms are not disclosed,these 30 elite CVCs were generally selected based on three criteria:1061642092572021202220232024

18、NewbieMiddleMatureNewbie:50%of funds are just beginning their journey in CVC.Middle:38%of funds have been active for a few years and have gained some experience in the CVC space.Mature:12%of funds are well-established and have a track record of successful investments in the startup ecosystem.Survey

19、Respondents Categorized by Their Strategic Focus,Maturity and Status as a Bellwether FundStrategic:47%of funds invest for insight or value-add related to the corporate parents goals.Hybrid:38%of funds are a uniquely defined balance of strategic and financial.Financial:15%of funds consider only finan

20、cial gain,a signal that CVC funds can behave more like traditional VC funds.STATE OF CVC 20246STATE OF CVC 2024721%24%27%27%28%28%29%31%31%29%28%$52B$88B$108B$103B$187B$165B$199B$401B$278B$176B$112B$184B3,6545,4466,2336,8048,1958,4999,48614,59013,98910,1595,1678,5182014201520162017201820192020202120

21、2220232024The CVC market has undergone significant changes over the past year,reflecting broader trends in the innovation economy.This year,investment in venture deals with CVC participation is on track to be$184B,an increase from last years value,while deal volume is projected to fall slightly to j

22、ust over 8,500.This downturn in deal count highlights a cautious investment climate influenced by rising interest rates and macroeconomic uncertainties.Despite the overall decline in CVC deal volume,early-stage investments have gained traction,accounting for 86%of all CVC deals in 2024.CVCs are incr

23、easingly targeting pre-seed to early-stage opportunities,allowing them to build closer relationships with emerging companies.This focus acts as part of CVCs sensor function,enabling them to identify and nurture promising innovations from the start.This shift toward earlier-stage investing is particu

24、larly relevant given the current challenges startups encounter in securingSeries A funding.The current state of the CVC market reflects a broader recalibration within the innovation economy.In fact,despite the pullback,CVC participation rates remain high today CVCs invest in 28%of VC deals globally.

25、While top-performing companies,especially in the AI sector,continue to attract significant investment,many others are struggling to secure funding.Notes:1)CVC-backed deals and dollars as of 8/9/2024.CVC deal count and value as a percentage of VC deal count and value as of 8/9/2024.Dotted lines show

26、2024 projections.2)Percentage of CVC funds that target each stage.3)Early-stage is defined as seed,Series A and B;late-stage is defined as Series C and beyond.Data as of 8/22/2024.Source:PitchBook Data,Inc.and SVB analysis.78%80%82%83%82%83%80%80%85%87%86%22%20%18%17%18%17%20%20%15%13%14%20142015201

27、620172018201920202021202220232024Late-StageEarly-Stage6%65%8%21%13%68%7%12%Pre-Seed and SeedEarly-StageLate-Stage andGrowthStage-Agnostic20212024Value of Deals Participated InDeal CountCVC Deals as a Percentage of VC DealsExtrapolated ValuesSTATE OF CVC 20248CVC-backed companies have shown resilienc

28、e in a challenging investment landscape,with valuations slightly outperforming those of VC-backed companies after each funding round.But CVC-backed companies do perform better.Despite challenges in the venture market in 2023,such as reduced investor risk appetites and fewer exit opportunities,CVC-ba

29、cked startups have demonstrated durability.Graduation rates for CVC-backed startups are twice as high as those for their VC-backed counterparts,which has contributed to a failure rate that is half that of purely VC-backed startups.Higher success could be attributable to quantifiable value-add that C

30、VCs provide,which translates to higher graduation rates.CVCs provide channel partners,early customers and extensive technical and research capabilities.The support of CVCs is vital as many startups in todays environment face lower runway,tougher fundraising cycles and depressed exit markets.Notes:1)

31、Funding round funnels for the past 10 years.2)Did not advance includes:a)companies that are still raising capital,but have not done so,b)companies that have failed,but the failure was not captured by PitchBook Data,Inc.,c)companies that raised,but the subsequent round was not captured by PitchBook D

32、ata,Inc.,or d)companies that reached profitability and do not need to raise and have not exited.3)Median valuations for CVC-and VC-backed companies,last 12 months as of 8/28/2024.Source:PitchBook Data,Inc.and SVB analysis.All VC RoundsVC With CVC Participation63%38%22%11%6%3%Did Not Advance265%Out o

33、f Business18%Exited15%Next RoundDid Not Advance268%Out of Business9%Exited17%Next RoundHalf the Failure Rate2 Percentage Points More Exits85%63%41%23%13%7%2x More Companies Advance to Next Round$102M$307M$8M$11M$16M$21M$25M$36M$40M$59M$50M$75MVC CVCVC CVCVCCVCVCPre-Money Valuations by Investor Type

34、LTM3Round 1Round 2Round 3Round 4Round 5Round 6CVCVC CVCVC CVCSTATE OF CVC 20249CVCs are obsessed with AI and are putting their money where their mouth is.In a free-response question,over half of CVCs call out AI as among the most exciting tech trends.It continues to be an important topic in conversa

35、tions across the industry in terms of both investment and implementation within CVCs own organizations.In 2024,nearly 30%of CVC deals involved AI,and CVCs are consistently doing more deals in AI as a percentage of their total deals,compared to VC overall.This is part of CVCs overall focus on technol

36、ogy as a broad vertical.In some sense,it is not surprising that the vast majority of CVCs focus on investment in the tech sector.A key role of CVCs is as the sensor function for the parent organization.Investing in tech addresses this by providing the parent with a window into emerging trends and in

37、novation in the industry.Despite a tense geopolitical landscape,there is some remarkable consistency in trends.From a geography standpoint,CVCs remain largely focused on the same key markets despite trade tensions,on-shoring trends and armed conflict.Asia continues to be the largest market for CVC i

38、nvestment,accounting for 39%of all deals.Asian investment is primarily driven by China,which accounted for 38%of the regions deal activity in 2024,but this has fallen from 49%in 2023.Notes:1)Summarized from a free-response question.AI includes AI and machine learning(ML).Climate includes energy-rela

39、ted responses.Healthcare includes biotech.Manufacturing includes materials and construction.Consumer includes retail and food.Computing includes quantum.2)AI companies with CVC and VC backing as of 8/5/2024.US HQ companies only.3)Industrial includes manufacturing,chemical and agriculture.4)HQ of dea

40、l company that CVCs have invested in globally as of 7/312024.Source:PitchBook Data,Inc.,CVC survey and SVB analysis.55%17%12%9%7%7%7%6%6%4%7%AIClimate TechHealthcareManufacturingFintechConsumerFuture of WorkComputingRoboticsCybersecurityOther7%9%12%15%16%17%18%18%19%23%26%10%12%16%18%22%22%23%21%22%

41、26%29%20142015201620172018201920202021202220232024AI VC-Backed DealsAI CVC-Backed Deals27%36%38%37%36%36%41%41%40%43%39%47%41%38%38%36%36%34%34%32%31%32%20%17%17%18%18%19%17%15%17%18%19%6%6%7%7%10%9%8%10%10%8%9%2014201520162017201820192020202120222023202483%48%35%35%TechnologySupply Chain&LogisticsB

42、anking&FinanceAutomotive/Transport76%34%33%TechnologySupply Chain&LogisticsEnergy&Resources77%32%30%TechnologyIndustrialEnergy&ResourcesFinancialHybridStrategicAsiaUSEuropeOtherSTATE OF CVC 202410STATE OF CVC 202411CVCs act as the eyes and ears of an organization,seeking to understand emerging trend

43、s in the parent companys industry.This is especially true for financial and bellwether CVCs,which generally have less interest in strategic alignment with the parents core business.These groups also tend to have the largest scope,investing across more verticals than their peers and gaining broader e

44、xposure to the market.Mature CVCs resemble financial and bellwether CVCs in this regard,suggesting that CVCs become somewhat more focused on gaining market intelligence as they age.Strategic and newbie CVCs,meanwhile,tend to focus more on augmenting the parents core business.This can be in the form

45、of seeking partnerships to help accelerate commercialization or sourcing potential M&A targets.As a result,they are constrained to the verticals in which the parent operates.Strategics invest in approximately three fewer verticals than financial CVCs;the difference between newbies and mature CVCs is

46、 even greater,at approximately four fewer verticals,as mature funds have had time to invest more broadly.Notes:1)Respondents could choose more than one answer.2)Categorized based on free-response answers.3)Out of 58 total verticals.Respondents could write in a different vertical;in this case,“other”

47、counts as just one vertical.Source:CVC survey and SVB analysis.10%5%11%6%10%10%7%53%40%24%45%33%10%10%73%84%67%87%75%48%57%67%73%82%69%80%88%93%NewbieMiddleMatureStrategicHybridFinancialBellwether42%17%12%8%8%6%5%2%Access Tech and PartnershipsAccelerate Growth and InnovationBuild Relationships With

48、Partners or TargetsFinancial OnlyCreate Strategic ValueOtherMix of Strategic and Financial ValueEcosystem Development7.18.511.38.210.011.613.6NewbieMiddleMatureStrategicHybridFinancialBellwetherMaturity LevelCVC Primary GoalSensor to Understand Emerging Trends and MarketsAugment Existing Business,Ac

49、celerate CommercializationOtherSource Potential M&A Targets Maturity LevelCVC Primary GoalSTATE OF CVC 20241257%72%88%66%82%90%97%NewbieMiddleMatureStrategicHybridFinancialBellwetherNewbieMiddleMatureStrategicHybridFinancialBellwetherTraditional VC Fund MetricsCapital DeployedStrategic EngagementP&L

50、 Impact16%14%16%16%17%8%7%PortCo Health15%13%18%14%11%3%48%64%44%24%74%45%50%87%44%42%62%44%51%86%56%50%95%32%22%90%48%34%When it comes to metrics,more is more.CVCs report a variety of metrics to senior management at the parent company from traditional VC fund metrics,such as IRR and exit count,to e

51、ngagement metrics,such as number of business unit(BU)partnerships or impact of BU projects with portfolio companies.However,there is a difference in reporting depending on the CVCs maturity and goals,particularly when it comes to financial metrics.As a CVC matures,it is more likely to report traditi

52、onal VC metrics a reflection of increased sophistication and investment holding times.When CVCs gain more experience,they develop more infrastructure for calculating return metrics,such as IRR.Besides financial metrics,executive sponsors appreciate a wide range of strategic KPIs to judge the CVCs pe

53、rformance.Collaboration with BUs is top of the list.This reflects a key goal for many CVCs of augmenting existing BUs innovation and production efforts.Other metrics such as insights on the market,size of funnel or amount deployed speak to the sensor function of CVCs.With larger funnels and more dea

54、ls come more companies met and diligenced,leading to strategic learnings for the parent.Notes:1)Categorized based on free-response answers;some answers were grouped into more than one category.2)Traditional VC fund metrics include IRR,TVPI,exit count,etc.Capital deployed also includes pipeline metri

55、cs such as number of companies diligenced.Strategic engagement includes metrics related to strategic learnings,projects or partnerships.Profit and loss(P&L)impact includes revenue growth or cost savings to the parent.PortCo health includes portfolio company related financial or growth metrics.Source

56、:CVC survey and SVB analysis.Maturity LevelCVC Primary Goal1Collaboration With the BUs2Revenue Generated or Cost Saved3Financial Returns(IRR,etc.)4Insights on the Market5Size of Funnel or Amount Deployed6Progress of the Portfolio Company7Strategic Value(Generic)8Meeting Potential M&A Targets9Public

57、Relations or Visibility10PortCo Capabilities Deployed In HouseSTATE OF CVC 2024137%13%27%33%20%123453%12%29%32%25%123455%10%31%42%11%1234515%20%33%25%8%123451%10%35%43%10%123453%9%24%34%30%123453%10%33%40%13%12345NewbieMiddleMatureStrategicHybridFinancialBellwetherDo Significant DDSponsor Deals0%10%

58、Vote On or Approve Deals10%Advise or Ad Hoc Work7%None/Minimal7%11%7%Staying close to parents has some real benefits.At first,it may seem that older CVCs would have a better-established brand and therefore rely less on the reputation of the parent company when competing for deals.In fact,mature and

59、bellwether CVCs are just as likely as newbies to rely on the parents logo to win deals.This is somewhat surprising,as bellwethers often shy away from the CVC categorization,preferring instead to be seen as independent investors,capable in their own right.The survey data suggests instead that these C

60、VCs can play both sides,balancing pursuing independence on one hand and capitalizing on the parents brand on the other.The trend continues when it comes to BU involvement in diligence efforts.While mature CVCs are more likely to report that BUs have minimal involvement,they still often rely on BUs f

61、or significant due diligence(DD)efforts.This is a benefit for CVCs when competing for deals.BUs bring technical expertise to help the investment syndicate assess the strength of the potential portfolio company.Financial CVCs are the one outliers in these trends,as they rely far less on the parent or

62、ganization both in terms of the parents reputation and the BUs expertise.Notes:1)“Do significant DD”:CVCs have BUs take an active role in DD or validating strategic fit.“Sponsor deals:”CVCs require BUs to sponsor deals before investment.“Vote on or approve deals”:CVCs have BUs vote with the IC or re

63、quire the BU to express interest.“Advise or ad hoc work:”CVCs have BUs serve as a sounding board or take on roles on a case-by-case basis.“Other”are not included.Some had multiple answers.Summarized from free responses.Source:CVC survey and SVB analysis.NewbieMiddleMatureStrategicHybridFinancialBell

64、wether40%33%38%25%36%27%17%22%12%14%20%20%15%17%17%13%15%14%23%20%20%27%43%17%37%39%26%22%53%57%53%64%53%32%53%1:None2:Little3:Some4:Much5:SignificantMaturity LevelCVC Primary GoalSTATE OF CVC 2024142%4%4%5%9%11%16%23%13%12%12345678910Any disconnect between the CVC team and its corporate sponsor can

65、 stall and ultimately break a CVC fund.Executive support is crucial for fund survival,from capital commitments to internal advocacy for the fund.While a lot more mature CVCs enjoy enthusiasm from their executives,newbies can struggle to get execs on board.One reason for this is misaligned expectatio

66、ns around timelines.Successful startups can take 7-10 years to exit,far beyond the short-term corporate performance timelines.Working with exec sponsors early can be helpful.Research by Ilya Strebulaev and Amanda Wang of Stanford University confirms that many CVCs believe that their execs dont under

67、stand VC and its norms and that“educating themis a constant struggle,compounded by frequent turnover of parent executives.”Indeed,when C-suite changes occur,CVCs are often placed in the crosshairs.Execs with different strategies or remits can turn resources away from CVCs in favor of other organizat

68、ional priorities.With far fewer private tech companies finding an exit in recent years,CFOs may view the CVC fund as a luxury the corporation can live without when the business is trading poorly.Notes:1)Summarized from free responses to question.2)In some cases,responses were counted in two categori

69、es,leading to the sum of all categories being more than 100%.3)Among those who think the exec sponsor does not understand VC and its norms.Source:Ilya Strebulaev and Amanda Wang,“Organizational Structure and Decision-Making in Corporate Venture Capital”(2021),CVC survey and SVB analysis.More Excited

70、Less ExcitedAverage Score by Group8.2Financial7.9Bellwether7.5Mature7.2Hybrid6.7Middle Maturity6.3Strategic6.3Newbie57%75%82%76%72%83%80%NewbieMiddleMatureStrategicHybridFinancialBellwetherMaturity LevelCVC Primary Goal28%21%18%14%12%5%5%Exec lacks VC backgroundExec lacks knowledge about the investm

71、ent processExec has unrealistic expectationsExec still needs convincing of CVCs importanceExec is too focused on M&A or R&DExec is actively working to understand moreOtherExec Lacks Familiarity With VC Asset ClassExec Lacks Familiarity With the Investment ProcessExec Has Unrealistic ExpectationsExec

72、 Still Needs Convincing of CVCs ValueExec Is Too Focused on M&A or R&DExec Is Actively Working To Learn More About CVCOtherSTATE OF CVC 202415Multiple,21%Chief Strategy Officer,17%Chief Executive Officer,14%Corporate Development,14%Chief Financial Officer,13%Other(Various),10%65%53%47%47%29%2%CFOCEO

73、CSOCorp.Dev.CTOCIOChief Innovation Officer,5%Chief Technology Officer,6%Among thosewho chose multiple options:As the VC market has cooled,the parent is left holding the purse strings.This year,CVC investment is slated to be just 46%of its 2021 peak levels.At the same time as this decrease,CVCs parti

74、cularly strategics are increasingly reliant on corporate balance sheets for investment capital.This creates dependency risk,as the brakes can be tapped based on corporate budget,executive fatigue or corporate reorganization,rather than for CVC performance issues.About one-fifth of survey respondents

75、 noted that they are considering moving off balance sheet.Among that group,there are a wide variety of reasons why.Two-thirds are seeking more independence from the corporate parent;roughly 60%are hoping to broaden their investment scope or recalibrate compensation figures.Still,moving off balance s

76、heet is easier said than done.Among the 19%that are considering moving off balance sheet this year,most face significant challenges.Further,among those who expressed an interest to move off balance sheet in the 2023 survey,all of them are still investing using the balance sheet,according to this yea

77、rs study.Source:CVC survey and SVB analysis.61%65%64%69%24%23%23%18%6%6%5%7%4%7%6%7%1%2021202220232024Considering Moving Off Balance Sheet,19%Not Considering Moving Off Balance Sheet,81%81%70%33%50%8%22%43%37%25%10%9%5%StrategicHybridFinancialBellwetherBalance SheetSingle LPMulti-LPMixOtherBalance S

78、heetSingle LPMulti-LPMixOtherSTATE OF CVC 202416In Progress,51%Unsuccessful,23%Meeting Resistance,17%Delayed,3%Other,6%Organizational structure can have a big impact on dependency risk,defined as the potential downsides of a CVCs reliance on its parent.There are a variety of ways to mitigate depende

79、ncy risk.Top among them are emphasizing strategic or financial returns to the parent,focusing on communication with the parent or getting outside capital for a more independent structure.However,some dont see dependency as a big issue.These CVCs accept that they must be closely aligned with the pare

80、nt to accomplish their goals of gaining insights or providing strategic value to the broader organization.In fact,the second most popular response to a question about how CVCs mitigate dependency risk was“nothing.”Those in this group felt that they were already closely aligned and were either unawar

81、e of the dependency risk or viewed the close alignment as positive for the CVC.Notes:1)Count includes CVCs that reported“zero”funds but still invest.Source:CVC survey and SVB analysis.3+Funds2 Funds1 Fund147%40%32%45%36%21%27%NewbieMiddleMatureStrategicHybridFinancialBellwether67%79%91%78%83%93%97%N

82、ewbieMiddleMatureStrategicHybridFinancialBellwetherMaturity LevelCVC Primary GoalMaturity LevelCVC Primary GoalMaturity LevelCVC Primary Goal40%12%9%26%6%0%7%NewbieMiddleMatureStrategicHybridFinancialBellwetherMaturity LevelCVC Primary Goal7%28%7%17%30%37%10%15%12%10%10%33%20%87%78%60%83%73%38%43%Ne

83、wbieMiddleMatureStrategicHybridFinancialBellwetherSTATE OF CVC 202417STATE OF CVC 202418Mirroring a broader decline in the VC ecosystem,more CVCs are making fewer than five investments per year today than in the past.In 2024,38%of CVCs made fewer than five investments per year,up from just 25%in 202

84、2.Unlike VCs,CVCs dont face the same pressure from LPs to deploy capital.In traditional VC funds,LPs often pay a management fee(even when funds are not investing)and have to hold liquid reserves;they therefore may put pressure on VCs to deploy capital.CVCs,on the other hand,dont face the same dynami

85、c from their corporate parents,making it easier for them to slow their investment pace to a trickle.Further,this survey likely misses funds that have gone completely dormant as a result of the current environment,which could mean we dont see the full scale of dormancy risk.Not only are funds making

86、fewer investments,they are taking longer to make them.The percentage of funds closing investments in less than 30 days has fallen by half since 2021,as the market has cooled and the mad rush to deploy capital has dissipated.That said,there are major differences between fund strategies.Strategics are

87、 generally much slower in their diligence process,given most must engage the business and get buy-in.Source:CVC survey and SVB analysis.4%10%23%17%StrategicHybridFinancialBellwether18%20%9%9%30%38%36%32%30%26%29%29%22%16%26%30%20212022202320243 MonthsCVC Primary Goal27%44%16%13%25%35%25%15%35%39%17%

88、9%38%40%12%9%20212022202320242021202220232024202120222023202420212022202320245 5-9 10-14 15+Investments per YearSTATE OF CVC 202419More CVCs make few investments.Fewer CVCs make many investments.8.4%7.8%7.3%10.4%2021202220232024CVCs have not taken a back seat when it comes to the percentage of VC de

89、als that they take part in.However,this is particularly true among strategic funds,which witnessed a 27-percentage-point decline between 2021 and 2024 in the share of funds leading deals.This is compared to a 11-percentage-point drop in financial CVCs and just a 5-percentage-point decline among bell

90、wethers.Surprisingly,while fewer funds focus on leading deals,ownership targets have increased in 2024.Over half of all CVC funds increased their target ownership percentage this year.This follows a three-year slide in target ownership percentages.With startup valuations reaching a market bottom and

91、 beginning to recover,CVCs seem to be capitalizing on low valuations with higher ownership.Target ownership stands at just over 10%,but the actual ownership funds acquire is slightly lower at just 9%.On average,25%of CVCs miss their ownership target,but that number is higher for financial funds(36%)

92、and lower for strategics(19%).Despite having target levels that are similar to those of financial CVCs,strategics likely have a higher success rate,as they can differentiate themselves through their strategic value.In many cases,founders will choose strategics for this reason,whereas financial funds

93、 compete with traditional VCs.Notes:1)Based on funds that filled out the survey in 2023 and 2024.2)2021-2023 surveys asked target and actual ownership in one question;2024 survey asks them as separate questions both actual and target ownership trend up in 2024.Source:CVC survey and SVB analysis.70%7

94、5%83%74%73%94%95%47%43%74%47%54%83%90%NewbieMiddleMatureStrategicHybridFinancialBellwether2021202455%34%11%Higher Ownership TargetNo ChangeMaturity LevelCVC Primary GoalSTATE OF CVC 202420Lower Ownership Target56%34%43%36%28%30%26%23%25%50%16%23%17%10%32%27%19%16%41%41%56%60%42%50%2124212421242124St

95、rategicHybridFinancialBellwetherFund strategy has a significant impact on follow-on investing.Strategic CVC funds may offer strategic value to portfolio companies in the form of contracts with the parent or industry expertise,but they dont always make great long-term capital partners.In 2024,half of

96、 all strategic CVCs do not hold capital reserves for follow-on investments this is up from just 25%in 2021.At the same time,fewer strategic funds are taking an“ad hoc”approach to reserves,indicating that they are becoming more sophisticated in their approach.At the other end of the spectrum,financia

97、l funds have doubled down on their commitments to follow-on investing 90%of all financial CVCs reserve capital or keep capital reserves on an ad hoc basis.This highlights a core difference in CVC strategies.While financial funds are interested in maintaining their ownership stake,strategic funds ben

98、efit most from the relationships with startups and the visibility into tech trends that come from those relationships.This also makes sense in the context of fund sizes strategic funds generally skew smaller compared to financial funds,meaning that strategics have less capital available for follow-o

99、n investing.Furthermore,in the current environment,22%of funds have seen fund sizes shrink.As a result of these dynamics and a tougher economic cycle for VC-backed companies,over one-third of CVCs say that follow-on investment has gotten harder.46%32%35%33%50%58%58%63%4%9%8%3%StrategicHybridFinancia

100、lBellwetherAd Hoc BasisNo Capital ReservesReserve CapitalEasierHarderSame35%55%9%2%25%58%12%6%9%59%18%15%$1BStrategicFinancialHybrid22%41%13%6%-50%-0%0%-50%50%-100%100%+13%of firms saw their fund size grow 50%-100%since 2021.Fund Size ChangeSource:CVC survey and SVB analysis.STATE OF CVC 202421CVC f

101、unds are often caught between the worlds of corporate control and venture freedom.Newbie and strategic funds spend a lot more time managing relationships with the corporate parent,and their corporate parents also have far more oversight into the CVCs workings.On average,half of strategic CVC funds s

102、pend at least 40%of time managing their corporate parents,compared to just 5%of financial CVCs.But despite spending more time with the corporate parent,far more strategic CVCs have deals blocked by a senior executive outside the CVC 34%of strategic CVCs frequently or occasionally have a deal blocked

103、 by a senior executive compared to just 8%for financial funds.Thus,the level of autonomy is vastly curtailed for strategic funds compared to their financial-focused counterparts.The same trends play out along maturity levels.As funds mature,they generally have greater independence and spend less tim

104、e with their corporate parent.This speaks to the importance of educating executives at the parent to ensure that they understand and support the venture strategy early so they are not a road block to the successful function of the investment team.As funds mature and executives better understand the

105、strategy and role of CVC,fewer funds have a single person with total influence over the investment committee.STATE OF CVC 202422Notes:1)Distribution of CVCs by the frequency a deal is blocked by the corporate parent.2)Distribution of CVCs by the level of BUs engagement required to invest.Source:CVC

106、survey and SVB analysis.NeverRarelyOccasionallyFrequentlyMaturity LevelCVC Primary Goal$2.0MWhile we generally see less oversight as funds mature,from an ecosystem perspective,we see a trend toward more control over decisions held by the IC.For certain investments,the CVC team can make a unilateral

107、decision to approve an investment without formal IC approval.Across the board,38%of CVCs used to be able to skip IC approval below a certain investment size;now,just 19%of funds can do so.While 63%of funds have an IC that includes members of the CVC on the committee,the greater importance of the IC

108、speaks to a broader trend of corporate parents keeping a more watchful eye on the CVCs activities.Zooming in,there are substantial differences between strategic,hybrid and financial funds.Fewer strategic and hybrid funds can skip IC review;the percentage of financial CVCs that can is growing.This in

109、dicates that perhaps strategic funds are getting more strategic while financial funds are getting more independent,which aligns with their objective of operating like a traditional VC.While only 9%of strategic funds can skip IC review,30%of financial CVCs can skip review.This reinforces the narrativ

110、e that financial funds generally have fewer constraints,allowing them to operate much more like a traditional venture firm.13%20%28%9%18%30%StrategicHybridFinancial24%14%11%60%38%34%23%19%2021202220232024$0-$249KTime Spent Managing Parent$250K-$499K$500K-$999K$1.0M-$1.9M$2.0M20212024Notes:1)For cert

111、ain investments,the CVC team can make a unilateral decision to approve an investment without formal Executive Investment Committee.Source:CVC survey and SVB analysis.STATE OF CVC 202423It is no surprise that exits have slowed substantially as IPO markets remain all but locked up and M&A activity pro

112、ceeds at a snails pace.The median CVC firm in 2024 saw just 3%of its portfolio exit,down from 8%in 2021.But many of these exits are likely not high-performing deals.From analysis of M&A deals,the exits that are occurring are generally of lower quality from the investor perspective.More than one in f

113、ive companies is selling for less than their last private valuation.Further indicating that fire-sale M&A is occurring,the median months of cash runway at the time of sale has fallen from eight months in 2021 to just five months today,according to SVB data.This may provide an opportunity for corpora

114、te parents looking to scoop up venture-backed companies at a discount.As a result of the slow exit market,investors(CVCs included)are hungry for liquidity in their portfolios.The hunt for liquidity is taking alternative forms;52%of CVCs have considered using secondary markets of those,and of 15%have

115、 leveraged secondary markets.While this is especially challenging to financial funds,which rely far more heavily on financial performance metrics when reporting to their corporate parents,strategic CVCs may be somewhat more insulated from lackluster distributions,given that corporate parents are oft

116、en interested in other metrics,such as BU engagements or investments made.Notes:1)Based on number of portfolio companies exited.2)Excludes those that did not provide an investment allocation(approximately 12%of survey respondents).Source:CVC survey,SVBs State of the Markets H2 2024 and SVB analysis.

117、0%2%4%6%8%10%12%14%202120222023202448%37%15%2.8%4.6%5.4%NewbieMiddleMatureMiddle 50%of CVCsMedianNoYes,we have considered the secondary market.Yes,we have used the secondary market.44%18%30%10%13%$100M+$50M-$99M$25M-$49M$11M-$24M$1M-$10MAnnual Investment AllocationSTATE OF CVC 202424STATE OF CVC 202

118、425Generally speaking,CVC teams are small,with 62%of firms having fewer than 10 people.That said,the most active teams have far more people;CVCs making 30+investments per year average 40 team members.Surprisingly,as teams make more investments and get larger,the percentage of the team that are inves

119、tors also grows it turns out that CVCs making very few deals have a smaller percentage of investors and a higher percentage of the team dedicated to adding strategic value.CVCs have the unique ability to leverage their corporate parents employees to add strategic value.These“virtual”team members pro

120、vide and support without formally adding dedicated headcount to the venture team.Mature,financial and bellwether CVCs have the fewest people hired from within the organization.The same is true when looking at CVC heads.Those who are hired from within the organization are far less likely to have vent

121、ure experience 79%of CVC heads hired from within the organization have no venture experience.This may place funds at a disadvantage when attempting to educate senior leadership on the venture model an important factor in determining the long-term success of the fund.Source:CVC survey and SVB analysi

122、s.47%41%26%45%30%24%25%NewbieMiddleMatureStrategicHybridFinancialBellwether21%79%79%21%External HireInternal HireHas Venture ExperienceMaturity LevelCVC Primary Goal815174045%50%88%57%0-9 10-19 20-2930+Team SizePercentage of Team That Are InvestorsInvestments per YearNo Venture ExperienceSTATE OF CV

123、C 202426There is a wide range of compensation structures across CVC goals.Financial funds are far more likely to offer carry or give bonuses based on performance,as it aligns investor compensation with the goals of the fund.Strategics,on the other hand,are not compensated in that manner as it would

124、create misalignment between the goals of the CVC and the goals of the individual.Carry is a powerful motivator for investors to stay with a firm,given the often-long vesting periods.Among funds that offer carry,35%of investors have been at the firm five years or longer.Among firms that do not offer

125、carry,only 25%of investors have been at the firm at least five years.A significant portion of total compensation for a traditional VC partner is often carried interest(when“in-the-money”).The median VC partner at a US VC firm with$250M-$500M AUM can expect$2.8M when carry is fully vested across all

126、active vehicles,compared to just$300K/year in total cash compensation.1 Not offering carry is a powerful motivator for top talent to look elsewhere if not compensated in other ways,such as through shadow carry or bonuses.Notes:1)Salary and bonus.Source:CVC survey,VC Platform Global Compensation Surv

127、ey and SVB analysis.0%30%45%20%5%2%20%43%26%9%10 yearsYears of TenureA greater percentage of investors with long tenure for firms with carry.Carry4%19%58%47%16%35%58%43%StrategicHybridFinancialBellwetherPercentage of Firms That Receive CarryPercentage of Firms Where Cash Bonus Is Linked to Portfolio

128、 Performance 20%40%60%91%AnalystAssociatePrincipalGeneralPartner/PartnerNo CarryFinancial CVCs are most likely to receive compensation tied to portfolio performance,given that it aligns investor incentivesand CVC goalsSTATE OF CVC 202427Jake Ledbetter Senior ResearcherSilicon Valley BEli OftedalSeni

129、or ResearcherSilicon Valley BAnjalika KomatireddyResearcherSilicon Valley BMark GallagherCo-Head of Investor CoverageSilicon Valley BCharlie WalkerManaging DirectorSilicon Valley BMikey KailisPrincipalCounterpart Venturesmikeycounterpart.vcPatrick EggenGeneral PartnerCounterpart Venturespatrickcount

130、erpart.vcSTATE OF CVC 202428Abbie WolfMarketing&Platform AnalystCounterpart Venturesabbiecounterpart.vc Silicon Valley Bank(SVB),a division of First Citizens Bank,is the bank of some of the worlds most innovative companies and investors.SVB provides commercial and private banking to individuals and

131、companies in the technology,life science and healthcare,private equity,venture capital and premium wine industries.SVB operates in centers of innovation throughout the United States,serving the unique needs of its dynamic clients with deep sector expertise,insights and connections.SVBs parent compan

132、y,First Citizens BancShares,Inc.(Nasdaq:FCNCA),is a top 20 US financial institution with more than$200 billion in assets.First Citizens Bank,Member FDIC.Learn more at .See complete disclaimers on the last page.2024 First-Citizens Bank&Trust Company.Silicon Valley Bank,a division of First-Citizens Ba

133、nk&Trust Company.Member FDIC.3003 Tasman Drive,Santa Clara,CA 95054#SVBSilicon Valley B STATE OF CVC 202429counterpartventuresCounterpart Venturescounterpartvcwww.counterpart.vcFounded in 2018,Counterpart Ventures is a San Francisco based venture capital fund investing in early-stage startup compani

134、es disrupting traditional industries.With its CVC roots,Counterpart provides access to potential enterprise customers and strategic partnerships for their founders.Investments focus on B2B SaaS,mobility and marketplace technologies that target conventional problems or fill missing gaps in large mark

135、ets.Our Counter Club community represents the most active and engaged network of CVC funds among any traditional VC firm.We galvanize the CVC industry through our events and discussions designed to share best practices for emerging corporate VCs.Given our successful CVC track records,we are the rare

136、 CVCs turned VCs with the ability to offer impartial advice to others.Visit our website for more information on how we invest and the Counter Club to become a member of our community:Counterpart Ventures http:/counterpart.vc Counter Club https:/counterclub.vc STATE OF CVC 202430STATE OF CVC 202431ST

137、ATE OF CVC 20243258%22%19%82%18%26%74%25%37%39%51%38%12%59%41%USRest of WorldPre-20152015-Present$250M$1B+$250M-$1BNewbieMatureIntermediatePublicPrivate1-511+6-10Source:CVC survey and SVB analysis.0%0%4%2%11%11%26%26%11%7%12345678910DetractorsPassives PromotersSource:CVC survey and SVB analysis.STAT

138、E OF CVC 20243324%17%22%30%45%43%49%52%31%40%28%18%2021202220232024DetractorsPassives PromotersSource:CVC survey and SVB analysis.STATE OF CVC 202434Financial Hybrid Strategic 8.37.97.97.97.38.17.37.27.77.67.46.82021202220232024Source:CVC survey and SVB analysis.STATE OF CVC 20243524%18%14%13%9%9%Co

139、rporate Prioritization/GovernanceSpeed/EfficiencySponsorship of PortcosDecision Making ProcessCVC FundingStrategic AlignmentCorporate Governance and PrioritizationSpeed and EfficiencyIntegration of PortCo with BU/CorporateDecision Making ProcessCorporate Funding of CVCSearch for Strategic Alignment

140、with CorporateSource:CVC survey and SVB analysis.STATE OF CVC 202436Percentage of Funds that Take Board SeatsPercent Where Board Seats are Taken(Among Funds that Take Board Seats)70%58%54%57%39%33%31%34%2021202220232024Source:CVC survey and SVB analysis.STATE OF CVC 202437Percentage of Funds that Ta

141、ke Board Observer SeatsPercentage Where Board Observer Seats are Taken(Among Funds that Take Board Seats)94%95%88%88%55%55%57%56%2021202220232024Source:CVC survey and SVB analysis.STATE OF CVC 20243875%54%54%87%98%85%87%100%FinancialHybridStrategicBellwetherPercentage of Funds that Take Board SeatsP

142、ercentage of Funds that Take Board Observer SeatsSource:CVC survey and SVB analysis.STATE OF CVC 20243947%72%82%0-9 10-1920+Source:CVC survey and SVB analysis.STATE OF CVC 20244035%58%60%67%FinancialHybridStrategicBellwether9%Of Funds Do Not Manage the Corporates LP PositionsSource:CVC survey and SV

143、B analysis.STATE OF CVC 202441LP Commitment as a Percentage of Fund SizeNumber LP Positions8%10%12%9%8436FinancialHybridStrategicBellwetherSource:CVC survey and SVB analysis.STATE OF CVC 20244224%24%20%14%12%5%Gain insights&expertiseIncrease deal flowIncrease diversificationExpand geographicalexposu

144、reIncrease diligenceOtherGain Insights and ExpertiseIncrease Deal FlowIncrease DiversificationExpand Geographical ExposureIncrease DiligenceOtherSource:CVC survey and SVB analysis.STATE OF CVC 20244317%6%56%20%We will not continue to invest as an LPDecrease number of LP checks we writeNo,we will rem

145、ain consistentIncrease the number of LP checks we writeIncrease the Number of LP Checks We WriteNo,We Will Remain ConsistentDecrease Number of LP Checks We WriteWe Will Not Continue to Invest as an LPSource:CVC survey and SVB analysis.STATE OF CVC 20244415%10%33%30%50%50%2021202482%of CVC Heads are

146、Male Middle 50%of FundsMedianSource:CVC survey and SVB analysis.STATE OF CVC 202445Years of Experience1%4%9%21%30%17%12%6%0-5 5-9 10-14 15-19 20-24 25-2930-3435+Source:CVC survey and SVB analysis.STATE OF CVC 202446NewbieMiddleMatureInvestments Since InceptionActive Portfolio010203040506070025507510

147、0Median25th75thSource:CVC survey and SVB analysis.STATE OF CVC 2024474691221$50M$50-$99M$100M-$249M$250M-$499M$500M+$100M$249M$250M$499M$500M+$50$99M$50MSource:CVC survey and SVB analysis.STATE OF CVC 20244877%44%31%55%28%46%36%NewbieIntermediateMatureStrategicHybridFinancialBellwetherPercentage Add

148、ing Strategic ValueSource:CVC survey and SVB analysis.STATE OF CVC 20244949%41%52%52%61%60%62%75%60%68%77%89%17%23%18%27%22%17%18%13%20%16%17%7%31%32%26%21%15%23%19%10%20%16%6%4%3%4%3%2%1%2%202120222023202420212022202320242021202220232024STATE OF CVC 202450$500MMaturity LevelNewbieMiddleMatureSource

149、:CVC survey and SVB analysis.STATE OF CVC 20245131%31%16%10%4%7%0-4 5-9 10-14 15-19 20-24 25+Source:CVC survey and SVB analysis.Team SizeSTATE OF CVC 20245243%43%28%202220232024Source:CVC survey and SVB analysis.STATE OF CVC 202453The views expressed in this report are solely those of the authors an

150、d do not necessarily reflect the views of SVB or Counterpart.This material,including without limitation to the statistical information herein,is provided for informational purposes only.The material is based in part on information from third-party sources that we believe to be reliable but which has

151、 not been independently verified by us,and,as such,we do not represent the information is accurate or complete.The information should not be viewed as tax,accounting,investment,legal or other advice,nor is it to be relied on in making an investment or other decision.You should obtain relevant and sp

152、ecific professional advice before making any investment decision.Nothing relating to the material should be construed as a solicitation,offer or recommendation to acquire or dispose of any investment,or to engage in any other transaction.Counterpart Ventures and all other non-SVB named companies lis

153、ted throughout this document,as represented with the various statistical,thoughts,analysis and insights shared in this document,are independent third parties and are not affiliated with Silicon Valley Bank,a division of First-Citizens Bank&Trust Company.Any predictions are based on subjective assess

154、ments and assumptions.Accordingly,any predictions,projections or analysis should not be viewed as factual and should not be relied upon as an accurate prediction of future results.Investment Products:2024 First-Citizens Bank&Trust Company.Silicon Valley Bank,a division of First-Citizens Bank&Trust Company.Member FDIC.3003 Tasman Drive,Santa Clara,CA 95054Are not insured by the FDIC or any other federal government agencyAre not deposits of or guaranteed by a bankMay lose valueSTATE OF CVC 202454