Venture capital funds run in-house by companies defended their ability to serve entrepreneurs at the Bloomberg Next Big Thing Summit after Union Square Ventures’ Fred Wilson ridiculed them earlier this month.
Wilson said he would “never ever ever ever” do business with corporate venture funds during an interview at a PandoMonthly New York event on June 13. Wilson’s assertion that corporations can’t effectively invest and nurture startups without sapping them of resources for the benefit of the parent company is wrong, said Deborah Hopkins, chairman of venture capital initiatives for Citigroup Inc.’s Citi Ventures, today in Half Moon Bay, California.
“The only way to be relevant is to truly be the champion of the company,” Hopkins said. “We don’t believe in pushing exclusivity at all.”
Corporate venture funds including Citi Ventures and Comcast Ventures, a unit of the largest U.S. cable operator Comcast Corp., have invested millions in startups such as Square Inc., Flipboard Inc. and Fullscreen Inc., said Heidi Mason, co-founder and managing partner at Bell Mason Group. They give entrepreneurs instant credibility and access to partners with international reach, she said.
“I happen to find that a patronizing, historical view of corporate venture,” said Mason, a senior adviser to Global 1000 corporations at Bell Mason and formerly CEO and co-founder of Acuity, a Silicon Valley marketing and communications agency.
Wilson didn’t immediately respond to a call and e-mail seeking comment.
Citi Ventures has given mobile-payment startup Square insight on how to expand internationally and implement technology in a business with the scale of Citigroup, the third-largest U.S. bank by assets, Hopkins said. Square, founded by Twitter Inc. Chairman Jack Dorsey, has raised money from investors including Citi Ventures, Rizvi Traverse Management LLC and Starbucks Corp.
Comcast Ventures, which has funded more than 100 companies with 40 active in its portfolio, appealed to Fullscreen as an investor because of the “insights and access” of the largest U.S. cable operator, according to Michael Yang, managing director of the unit.
Comcast, Chernin Group and WPP Digital said yesterday they’re investing in the two-year-old Fullscreen, an independent YouTube network with more than 10,000 channels. Comcast’s NBC Universal unit also makes the venture fund an appealing equity holder for many media companies, he said.
“I think in very specific industries, like health care, education and media, you don’t get too far in those ecosystems without a corporate partner,” Yang said.