Big tech companies continue to spend money on acquisitions as evidenced by Microsoft’s $1.2 billion purchase of Yammer and Facebook’s recent buys of Instagram and Face.com. But what about corporate venture capital — when the tech juggernauts sink smaller investments in companies with hopes of future payoffs?
A new report out from CB Insights suggests that corporate venture capital is actually experiencing a dip. (Maybe they’d just rather buy companies outright, rather than mess with smaller equity stakes?).
“Based on their deal and financing activity, corporate venture capitalists are making bets but at a very measured pace,” according to the report. CB Insights tracked 84 deals totaling $1.09 billion during the first quarter, down from the fourth quarter when 98 deals totaling $1.37 billion were recorded.
Corporate VCs — through venture arms such as Intel Capital or Google Ventures — invested $5.5 million more per deal than the average VC deal in the first quarter. That’s not a huge surprise given that corporations typically don’t bet on raw ideas, and would prefer to see a company that has a bit more traction in the market.
Now, it is worth noting that Microsoft doesn’t have a venture capital arm and rarely takes equity interests in companies, a strategy that employed by Amazon.com. (Though Amazon.com founder Jeff Bezos has been actively investing his own money through Bezos Expeditions).
Interestingly, I’ve actually seen a fair number of what I’d term corporate investments in startups in the Seattle area. Those include this week’s investment by Catholic Health Initiatives — one of the country’s largest faith-based hospital operators — in Seattle’s Carena and Premera Blue Cross’ bankrolling of health rewards program EveryMove.
Money photo in teaser via Andrew Magill.