Are unicorns an endangered species?

| June 23, 2023

Last week Ilya Strebulaev joined the panel at Viva Technology in Paris to discuss unicorns and their future with Jenny Fielding (Everywhere Ventures (The Fund), Maya Noël (France Digitale), JP (Joonpyo) Lee (SoftBank Ventures Asia), Charlie Perreau (Les Echos).

At our session “Unicorns An Endangered Species,” we discussed way more than just unicorns:

1️⃣ What is a unicorn and whether the valuation is the only criterion for success?
2️⃣ What has happened to many unicorns recently?
3️⃣ Is it a good criterion for country’s innovation success to count its unicorns?
4️⃣ When is a good time to invest in startups?
5️⃣ What are the historical patterns for startups to become successful?
6️⃣ How young can the companies be to become a unicorn?

Viva Technology, thank you for having us! Watch the full session below:

Is it good to have short-term goals?

| April 7, 2023

Two years ago, we conducted a major study of large US Corporate VCs (CVCs), with a lot of surprising results. Amanda Wang and I have now expanded to cover 164 US and Global CVCs. These CVCs represent three out of every four CVCs among all the S&P 500 companies and over one out of three large global CVCs.

One of the surprising – and disturbing – outcomes is the short-term nature of corporate parent – CVC relationship. Over half of all CVCs have a very short-term planning horizon, less than two years. Many CVCs are evaluated on a quarterly basis. Only a quarter of CVCs have the horizon over five years. 

US companies reveal more short-term attitudes: 67% of US companies give their CVCs short-term objectives compared to 45% of global non-US companies and only 15% have long-term objectives (35% globally).

All this evidence is in stark contrast to the patience you need as a startup founder, employee, or an investor. It is also in stark contrast to the way institutional VCs are setup.

Here is a quote from one of our study participants, head of a large consumer CVC: “This is where CVC is so funny to me because to really do true innovation, you have to have a super long-term horizon, but in reality, we have a super short-term horizon. The long term is sacrificed for those short-term needs.”

Do parents shoot themselves in the foot with short-termism?

This research has been done with support of the Venture Capital Initiative at the Stanford University Graduate School of Business.

Decision making and success in corporate ventures

| August 17, 2022

When Ilya Strebulaev attended the LBS Private Capital Symposium, he covered a myriad of questions on Corporate VC: from defining success of a CVC unit to its structure compensation arrangements.

After the Symposium, Ilya had a wonderful conversation on CVC with Gary Dushnitsky, an Associate Professor of Strategy and Entrepreneurship at LBS. They discussed decision-making and the success of CVC units. They also covered how to conduct research on CVC. Many posts on CVC that Ilya shares on his LinkedIn page came out of the issues he discussed with Gary and many others.

How do corporate VCs make decisions?

| October 5, 2021

Amanda Wang and Ilya Strebulaev conducted in-depth interviews of 74 corporate VC units (CVCs) of large US companies in the S&P 500 index. 74 may not seem a large number but it is more than three out of every four corporate VCs among all the S&P 500 companies!
 
They have learnt a great deal – most importantly, how different CVCs are from one another.
 
As a preview, check how CVC units are funded by their “parents.” Most CVCs invest from their parents’ balance sheet, and many parents give their CVCs only a small degree of budget autonomy. This may worry founders and portfolio companies and also makes the personal relationship and informal trust with parent executives (as well as actual CVC results) critical for CVC survival and success.
 
This research has been done with support of the Venture Capital Initiative at the Stanford University Graduate School of Business.

What is the economic impact of venture capital?

| August 3, 2021

We finally have some answers. 

Will Gornall and Ilya Strebulaev have posted a new paper, and their results suggest that the US VC industry is causally responsible for the rise of one-fifth of the current largest 300 US public companies and that three-quarters of the largest US VC-backed companies would not have existed or achieved their current scale without an active VC industry.

We attach a figure from the paper that shows the difference in the number of top public companies founded in each decade in the US and other G7 countries since 1900. The difference since the 1970s when the US VC industry became active can clearly be seen.