Fred Wilson remains very much alive and one of the most successful VCs in the game, but I’m sure he’s preemptively rolling over in his grave over the latest CB Insights report on the rise of corporate VCs.
For those who missed our New York PandoMonthly fireside chat with the Union Square Ventures partner last year, he gave one of the most animated and impassioned responses to an inside baseball question we’ve seen of any of our guests. When asked about the lessons he’s learned as a VC, Wilson was quick to reply that investing with corporate VCs was something that he’d “never, ever, ever, ever gonna do again – never, ever, ever – never.”
Asked why he felt so strongly, he replied, “They Suck! They are not interested in the company’s success or the entrepreneur’s success. Corporations exist to maximize their interests. They can never be menchy or magnanimous. It’s not in their DNA, and so they suck as investors.”
Well bad news Fred, but according to CB Insights as, “Q1 2014 marked a blowout quarter for funding activity with corporate venture participation as funding hit $3.01B across 129 deals.” The activity level marked an eight quarter high and an increase of 73 percent quarter-over-quarter. Average deal size too was up by 69 percent, leading CB Insights to predict “bubble chatter.”
The is, however, one sliver of good news.
Google Ventures lead all corporate investors, followed in a distant second place by Intel Capital. Wilson made a special point to call out these two firms in particular amid his rant, saying that they approach the business more like good VC firms and would likely be good partners to work with.
Wilson later clarified his live remarks on his personal blog, writing, “Every once in a while I display some emotion publicly that I regret. That happened last Thursday night on the subject of corporate venture capital.” He went on to differentiate between passive corporate VC arms – like Google Ventures, Intel Ventures, SAP Ventures, and Comcast Ventures – and active strategic investments, calling the former a good source of capital and the latter at odds with the objectives of the entrepreneur and company.
Maybe startup founders watch PandoMonthlies (and read AVC) and actually took Wilson’s advice.
Watch Wilson share his thoughts on corporate VCs below: