Corporates make push into venture capital

Greg Gille
04 April 2012

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As Europe’s newest corporate venture fund makes it first investment, figures suggest corporates are making a heavy push into early-stage financing. Greg Gille investigates.

European corporates are getting serious about venture. A new venture initiative dubbed OpVentures has been spawned by French businesses France Télécom and Publicis, when they acquired a 24.5% stake in Iris Capital Management, a CDC spin-out. The two corporates have pumped in a total €150m to top up Iris' existing commitments from institutions including the European Investment Fund (EIF) and CDC Entreprises, giving the vehicle a total of €300m to invest.

The entity will actually manage three funds instead of one. OP Ventures Growth will target established companies in France and Europe, providing up to €15m per project. OP Ventures Global will invest in start-ups outside Europe, also with funds of up to €15m per project. These two vehicles are already operational. Finally, OP Ventures Early Stage will provide up to €3m to young companies in France and Europe - it will be operational at some point in Q2 2012.

OP Ventures recently led its first investment since the move, a $15m investment round for myThings alongside other VCs. On top of fresh equity, the UK-based display ad company will benefit from access to the Orange Ad Network, as well as Publicis' ties to global advertisers and publishers.

Bucking the trend
With a sizeable commitment as LPs and a slice of the management company, France Télécom and Publicis have found a niche somewhere between the two traditional models of corporate venturing - with most corporations either investing via their balance sheet and an in-house structure, or acting purely as fund-of-funds (FoF) investors.

Could it also be a sign that European corporates are ready to step up to the plate, at a time when LPs might shy away from VC funds? "This initiative illustrates a sweeping change in venture capital across Europe: renewed interest from the corporate world in sourcing innovation through venture capital investments," EIF chief executive Richard Pelly said in a statement.

Indeed, France also saw SNCF, France Télécom (again), PSA Peugeot Citroën and Total launch the €30m Ecomobilité Ventures vehicle at the end of 2011.

The VC fund will target businesses developing sustainable mobility products, services and technologies as well as mobility-related clean technologies.

According to a recent study conducted by business association PME Finance, French corporates invested in venture to the tune of €300m as FoFs last year - roughly 10% of the overall amounts raised. They also injected another €100m into French SMEs directly through their in-house VC arms.

But France (and Europe in general) still has ground to cover when it comes to corporate venture. The PME Finance study found US companies contributed to 8% of venture activity between 2001-11. In Europe, contribution oscillated between 4-6%, and stood at 2% in France between 2003-10.