How can we offer something unique to founders, which offers real edge in a hyper-competitive venture market but still authentic and aligned with our backgrounds?

We considered this question in the early days of Counterpart Ventures. Differentiation in VC is mission critical. The landscape is littered with commodity funds. Many early stage funds simply lack meaningful sustainable advantage over time. So we asked ourselves what is our unique competitive edge given our two combined decades of early stage investing? Our response was contrarian. While Counterpart Ventures is a pure 100% traditional financial VC fund, we are the rare duo in which the founding partners are CVC alumni. We are in a unique position to offer thought leadership, guidance, counsel (as well as the occasional therapy session!) to the CVC community.

When most investors depart corporate venture capital (CVC) they try to rinse themselves of the CVC stigma. We did the opposite. We embraced our CVC roots when we founded Counterpart Ventures in 2018.

Founded by two former corporate venture capitalists, we took a contrarian approach— playing up the strengths and harnessing the weaknesses of CVC.

We created our value-add Counter Club network as a way of giving back to the CVC community. Our intention was to share our own war stories, provide advice to nascent funds and simply demystify CVC in a refreshing “non-corporate” way. We activated our CVC network and built the largest and most engaged CVC community by any traditional VC fund. Our long term relationships and CVC street cred allowed us to serve as a diplomatic intermediary in the community. We use this currency to diligence investment prospects across almost any industry given the diverse representation of our corporate members.

Many of the classic CVC stereotypes no longer hold water. But there is still significant work to be done. Our recent State of CVC report with Silicon Valley Bank highlights the evolution of corporate venture and amplified importance in the overall tech ecosystem.

The Importance of CVC in Ventures

Over the past decade we have seen CVC take a turn for the better. CVCs are now part of 1 in every 4 VC-backed deals and a CVC investment is correlated with a higher chance of a successful exit. The value a CVC fund could bring to the table was always evident, the delivery was perhaps missing and needed some guidance. Surprisingly and despite what experts predicted, CVCs turned up the heat and doubled down during the COVID-19 pandemic. At the onset of the pandemic when almost all VCs hit the pause button we hosted a call attended by ~ 70 CVCs titled Reality Check. Some bold predictions were cast by guest presenters, including one that suggested a CVC contraction was inevitable:

“Based on 2001 and 2008 events, I predict that of the approximate 1400 CVCs in existence today, 500–800 will get disbanded over the next 5–7 years.”

While it is still possible that we witness some reset over the next decade, CVC is stronger than ever. Over the past decade the number of corporates active in the US VC industry has more than doubled, with several recently public companies joining such as Coinbase Ventures, Slack Fund, Okta Ventures and Snowflake Ventures.

The 2021 State of CVC Report

We recently conducted the largest CVC benchmarking survey to date with Silicon Valley Bank. Our aim was to capture the most up to date self-reported data on how some of the biggest CVCs from around the world operate. 106 CVCs from ten different countries, accounting for ~ $7B in capital deployed annually and nearly 40% of total US CVC deals took part. The survey was completely anonymous with all data aggregated into a report we released on September 16th.

Why did we do this?

At our prior CVC shops, we struggled to find any accurate CVC benchmarking data. Frankly it did not exist. We relied on anecdotes and one-off data points. It was art with no science. With that in mind, we wanted any CVC benchmarking report to achieve the following:

  1. Create most comprehensive data set of self-reported data (106 CVC funds). This is not secondary data.
  2. Synthesize the data into a compelling narrative with juicy takeaways. CVC leaders could relay these best practices and trends to the HQ mothership and achieve their own goals.
  3. Present more transparent and educational data to the broader ecosystem: founders, traditional VCs, industry so we neutralize classic misconceptions about CVC investors.

We also benchmarked data against a set of 20 bellwether funds — a cohort of undisclosed CVCs selected based on historical track record, current scale and investment velocity. Here is a link to download the full report. Below is one page from the report where we busted five common CVC myths:

How Do We Fit In & Why Us?

Again Counterpart Ventures is the rare traditional financial VC started exclusively by CVC alum. We are aware of all the internal challenges, blind spots and lazy misconceptions of CVC. We also are aware of the potential opportunity and upside of CVC. We breathe authenticity. We are not living on borrowed knowledge, we actually lived it. No one better understands the challenges and pain of CVC leaders than us.

What started in 2018 as a small gathering of 35 corporate VCs in San Francisco to talk candidly about common challenges has blossomed into 200+ members of what we now call the Counter Club. It is a community of corporate VCs that we occasionally advise in times of need and regularly host events for. We share our CVC playbook that has been thoughtfully pieced together from two decades worth of CVC experience acquired by our General Partners. We are one of the rare traditional VC funds with true street cred in CVC — defined by successful exits, deal velocity, leadership and maverick moves.

Nowadays we find ourselves talking with multiple CVC funds each week, providing constant advice of some kind. In doing so we tend to find many commonalities amongst CVCs we speak with, some included:

  • Many face the same frustrations and opportunities, no matter what sector they invested, the size of their fund or check sizes they write.
  • For nascent CVCs there is a desire to learn from others that have perfected the art before them, but many don’t know where to start

CVC needed to open up its doors but there is a trust factor to navigate. Most large CVC gatherings are not conducive to meaningful discussion. Conversations are tempered with corporate PR police watching on the sidelines. The meaningful conversations were taking place elsewhere, in the hallways or in small trusted groups outside. As such, we intentionally organize created the Counter Club as invite-only to ensure attendees are part of the solution or positively contributing to discussions. And we believe we are one of the best placed independent, unbiased funds to perform the role of intermediary amongst the CVC community.

We’ve become known as a trusted advisor of sorts. We don’t start the clock when we’re speaking with you and there’s no fee to attend our events. We recognized a dearth in leadership from a neutral independent fund and chose to fill the role. Our openness also stretches to our partners in the Counter Club. We invited Silicon Valley Bank, Aduro Advisors, Pitchbook and Lowenstein Sandler LLP to join the network and offer their time to emerging CVCs beginning their journey. This trusted group has decades of experience ready to impart on nascent CVCs.

If you would like to learn more about our events, including those we’ve already hosted, or have questions on some of our services then please get in touch. You can find a list of our past events here and more information on existing members here.

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Sources

  1. Pitchbook, Analyst Note: CVC’s Sea Change, Tracking the Strategy’s Shit, December 9, 2020, https://pitchbook.com/news/reports/q4-2020-pitchbook-analyst-note-cvcs-sea-change-tracking-the-strategys-shift
  2. Q1 2021 Venture Monitor Report, Pitchbook & NVCA, https://files.pitchbook.com/website/files/pdf/Q1_2021_PitchBook-NVCA_Venture_Monitor.pdf

Stage agnostic Venture Capital firm based in San Francisco investing with unrivaled conviction to create unique and memorable stories.