In a recent blog post, we discussed the birth of the Unicorn startup: a start-up businesses that do not have an established performance record, but hold a stock market valuation or estimated valuation of more than $1 billion.
Following on from recent discussion articles posted on our subsidiary, CFPro Ventures’ blog about Corporate Venture Finance investment and the opportunity that that holds for high-growth businesses who are ready to compete at an even higher level, it has become clear that Corporate Venture Finance continues to trend as one of the quickest growing funding opportunities for startups and mid-sized companies.
In the first half of 2017 alone, funding participation in global corporate venturing deals totalled in excess of $6.6 billion with a 200% increase in investors since 2012 landing the first half of 2017, as having the largest number of corporate investors since 2012. There is change. And instead of resisting disruption, corporate entities are embracing the disruption by joining ranks with the disruptors themselves.
And following on from our initial Unicorn post, it was interesting to note that up until June 2017, the active investment into so-called Unicorn businesses ranked at it’s recorded highest level. (Source: CBInsights)
So, how does this affect you?
Regardless of the side of board room table you find yourself on, if your business is heading towards a Corporate Venture investment deal, there will probably be quite a bit of administrative, operational and procedural due diligence that you will need to put into place. There are roles that you’ll need to play, and tasks that need to be done to ensure that the investment continues to deliver return – whether that be strategic or financial.
As the investor, you and your team will hold responsibility for helping to perform a range of analyses that will include industrial analysis, competitive analysis, and comparative valuation. You would need to determine the organisation’s position in the market and to provide the leaders with a proactive assessment and any other relevant feedback and guidance that is needed by the organisation’s senior teams on how to increase the interactions with the investment community. You’d need to understand the path that your investment takes and identify relevant exit strategies. But simpler than that, you’ll need to ensure that you are able to give back what your portfolio company expects – whether that be hands-on direction, or more. There will be, depending on the deal you secure, a level of expectation on you to deliver.
Similarly, as the portfolio company, receiving an investment, you, too, will have a considerable amount of responsibility on your list to demonstrate value, return and continuous feedback on what their investment is doing within your business.
If any of this makes you feel slightly daunted, and you need professional help to keep you compliant, manage your stakeholder and shareholder communications and documentation, or anything else in between, then it’s time to chat to us. We, as part of a bigger team of professionals, have extensive experience and the right ability to deliver what you need, when you need it most. Talk to us today.