Editor’s note: Held on May 23, 2024, ORIGIN: Asia Tech Conference is a tech conference co-organized by TNGlobal and Macau Greater Bay Area Technology Exchange Association. This was also a BEYOND Week partner event at the BEYOND Expo 2024 held at The Venetian Macao Cotai Expo, Macao.
“CVC: Navigating Innovation and Strategic Partnership in The Digital Era” was a panel that featured Raymond Hor of Sunway ILabs Venture; Josie Lai of Genting Ventures; Jie He from Global Brain and David Goh from Hyundai Cradle and was moderated by Hao Tran from Vietcetera Media. The panelists shared their expertise on how CVCs are fostering innovations and collaboration and why more corporations are looking into setting-up corporate venture arms at the ORIGIN: Asia Tech Conference.
The text below has been edited for clarity and brevity:
Raymond Hor, Director of Sunway ILabs Venture
How can companies best leverage CVC to achieve their broader corporate objectives such as entering new markets or developing new technologies?
For Sunway Group, we are involved in the 12 to 13 business divisions. We have property, construction, shopping mall retail and theme park. We also have a medical Group, education, trading, quaries etc. So, for us is basically on the long-term goal is to leverage on CVC to scan the market right for new business opportunities and also potential threat that can disrupt our own business.
During Covid, we see the rise of eCommerce which is at the same time the footfall into the shopping mall is almost zero right doing because of the movement control and then we start to feel that the group want to elaborate on new technology to handle the risk during that time and they try to change. So, basically from the corporate point of view it’s really to empower the individual business unit to drive changes “outside in” rather than “inside-out”.
By looking at the startup they also can benchmark what are the Innovation out there. So, during the time we actually have invested before the covid happen. We invested in the e-commerce and the company which is a regional e-commerce enable company which help companies or brands to sell on Shopee and Lazada. They have evolved further to become a big data company driven by AI. So, from Sunway, we can actually leverage on the startup to give certain insights to our retail business unit and the shopping mall how to leverage on this kind of startup to help to improvise and also to change during time like this
Josie Lai, Head of Genting Ventures
What are those key challenges that you face running CVC on both the internal side managing stakeholders, their expectations on financial returns or intelligence?
Genting Ventures want to be that central point to connect the startups to the rest of the group but obviously the Investments team are all recruited externally with venture capital background. We’re not from within the group and because how massive the contain group is we have four listed entities and similar to Sunway, we also have like many different CEOs runs different business units so it takes time for us to build the relationship, to firstly understands what’s going on with all these business units so that our investment mandates can more align with the business strategic direction.
Then the other part is how can we have that deep relationship where we can always pin any of the business units to say are you able to help us validate certain startups we’re evaluating for investments but in a way that we are also lucky that once we have done the investment because our investment committees who approve the investments, they are also stakeholders in Genting Ventures and they have been within the group for 20 over years and they have certain deep relationships with certain business units so they can help us make that advocates to relevant business units.
But sometimes we have to do in the other way is that we have to use the startups to get to know bottoms up to certain business units and get to know them and understanding what problems they’re facing and asking them to help us validate the startup solutions right. So that is sort of the challenge we face ,but we are getting there I mean we’re slowly building the relationships internally.
Jie He, Director, Investment Group China Office Representative of Global Brain
What is your perspective over at the China side of thing for Global Brain which is a Japanese CVC?
Global Brain is a Japanese based independent venture capital and we have our global present presence in Asia specifically. We have office in Shanghai, Singapore, Jakarta and we also got our offices in UK, Berlin, United States but many our funding are from Japan so we got our flagship fund mainly sponsored by the Japanese financial institutions and one special point of Global Brain is our firm actually managing about 20 CVC of the Japanese large corporations. Those 20 CVCs are in different industries such as the real estate. The Mitsui Fudosan is one of the top developers in Japan if not the first one. And we got KDDI as our another CVC sponsor and KDDI is one of the largest telecom communication company in Japan. There are some other for example like Sony Financial Ventures, and Canon, Epson, Kyocera, those are for the electronic industries. We’ve got some very interesting ones like ANA, Nippon Airways which are the airway companies. So, in CVC point of view, we are acting as the single GP for all those CVCs and those big corporations and are acting as single LP for each fund and for each fund they have their purpose of investing. In general, there are two purposes one is to acquire or get the transfer of the technology.
In my field, I cover the Greater China Market which means mainland China Mainland, Hong Kong, Taiwan. We got some like good technology here for example the robot for example the rvr and the SaaS. So, we invested into such companies and bring them to the oversea market. And the second thing is the CVCs are acting as supporting the business divisions to expand their existing business.
David Goh, Head of Cradle Singapore, Hyundai Cradle
What are the key challenge you faced in operating this business of automotive?
As you can imagine with any startup that we want to work with, often times I would say that it’s really the engagement period and the intensity of the engagement. This is not a process that you can short circuit or you could or there are shortcuts because if you were to not be able to bring in business units that would benefit most from this interaction with this particular startup, then over time it is not sustainable.
And you end up having some of the problems that alluded to. When you have a CVC, you put in very little money and it’s just trying to get information for information sake and there’s very little synergies going on in both directions. I think one advice that if I may propose to startups out there that want to raise money from CVC is not to think of the CVC just as an investor. Think of the CVC as a customer.
I think if you did that and after the CVC has invested and you keep thinking. What can I do right to get this CVC to buy my product or my service because often times it’s one of the KPIs for us. It goes back to the challenge: how do I demonstrate to my board, how do I demonstrate to top management that the investment that we made in this startup or this portfolio makes sense, it’s creating synergies. Question [on how] we are going to market with this startup.
Are we going to buy the startup? are we going to create a new product?
To a certain extent, we are less concerned about whether this startup that we invested in becomes a unicorn and therefore we make a lot of money selling the shares. There’s going to be value transfer from the valuation of the startup to the CVC itself. If I’m able to help through the startup create a new product or service and we go to market together so that I bundle your product and services into my product we make money together.
But, again the process of getting there is arduous and it takes a really long time and it’s sort of multi-faceted and involves multi parties, some of whom I got to say you go to literally drag screaming and through the process until they then see for themselves: This startup is actually creating something that is of value for me. So, I think these are the sort of ups and downs of being a CVC.