To start, let’s take you through the new class of corporate venture capitalists, folks against term sheets, and a firm that offers VC-as-a service.

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The New Corporate Venture Capitalists

Corporate venture capital (CVC) funds are everywhere. The category is loosely defined as corporations starting venture capital arms to work with smaller startups.

Within CVC, there’s a subset of companies that use a third-party operating group to do their investing. The funds don’t function under their corporate parent’s branding. Instead, they make their own, separately branded fund. Take for example, a firm that was backed by a commitment of $1.2 billion. This is a thread different than say, Intel starting Intel Ventures and investing across startups under that branding.

Another recent example of this happening is Cisco starting Decibel, a VC firm that is an independent entity focusing on enterprise innovations.

“Decibel will execute its own investment strategy, fund operations, and portfolio management, all while still having unique access as a highly collaborative and aligned partner to Cisco,” the company said in a .

For independent venture funds spun out of corporations, check out , and .

The issue with traditional CVC is that they lack the longevity of a traditionally built out venture capital firm, according to , the CEO and managing partner of Next47.

He added: “It’s the cycle.”

This cycle, understandably, could leave the startups that work with a CVC fund in an unfavorable limbo. So much so that at least recommends doing quite the opposite: it brands itself as helping founders avoid traditional investment, and go the bootstrapping route. That brings us to our next topic: the group of investors who are convincing startups they are more than profit hungry, by never taking equity.

The Anti-Termsheet Club

, a new kind of venture capital-ish firm from and , doesn’t have any equity in the over 700 companies it works with. But it put investments in each of them.

How does that work?

Flexing its the firm’s strategy uses an algorithm to sift through a startup’s data and see if its a fit. The entire process was created to be shorter than the average investment timeline. The fund’s definition of the ideal investment? An e-commerce company that has positive ad spend and positive unit economics.

As companies are under demand to raise more venture capital money before going public, Romanow tells me Clearbanc wants to help founders keep more ownership of their company amid the trend.

Romanow cited how, for example, when went public Bill Gates owned of the company. For comparison, when Lyft went public, the founders only owned around of the company.

This data-only strategy has helped Clearbanc break patterns with investing in people who look and sound like the status quo. Romanow says they’ve funded 8 times more women than the average VC. Clearbanc has in 2019.

There are, of course, some aspects that will never go away from traditional investing. She says that while their deal flow is heavily driven by numbers, associates at Clearbanc have the ability to singlehandedly veto a deal if the founder and startups don’t match up culture or personality wise.

“There’s always got to be due diligence,” she said.

But what happens when you outsource that due diligence?

VC-As-A-Service

, a firm which we wrote about last month, invests in startups on behalf of corporations through its “VC-as-a-service” model. It manages over $600 million in assets across all of the large corporations it works with, and has done over 150 investments.

Corporate venture capital’s main issue is that corporations don’t have the motivation to help the startups they invest in, grow to the next step, says , the founder and CEO of Pegasus Tech Ventures. With a third party firm like Pegasus, he claims, a fund can help a startup grow beyond just one round. He claims that Pegasus has made multiple follow-on investments in 80 percent of their portfolio companies.

This idea of an ecosystem, where one sides feeds another, didn’t work well for at least one venture firm: . The company notoriously to participate in every stage of a portfolio’s life company, from startup to unicorn trying to go public.

Additionally Uzzaman says that Pegasus has the network of traditional VCs, unlike CVCs.

“We do not have any restriction from introducing the startup to other corporations and funds,” he said during a phone call. So they do. Once, a startup was even funded by three separate corporate funds underneath the Pegasus umbrella.

In the event of economic downturn, Uzzaman explained that half of their investments are outside the United States. They currently have a presence in 17 countries.

Big Picture

Regardless of all of this innovation and flashy changes, venture capital is a long term business. Returns take time, even up to 15 years, some say. So these new versions are, just like the startups they’re investing in, bets. This is just a part of the evolution, and you can be sure we’ll be tracking the success as and when the first returns roll in.

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The new investments, shared at the company’s Global Summit, are part of its continued goal of putting $300 million to $500 million dollars into smaller companies annually, it says.

Prior to announcement, the firm had made a total of 1,292 investments, .

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What do just 14 more companies have to do with an already hefty number?

The company says that it plans to take “larger, more strategic positions” in this batch of startups. Intel Capital is tackling startups in artificial intelligence, communication, health care and manufacturing ().

The investment announcement was coupled with the news that Intel is partnering with HBCUvc, a nonprofit that trains students at historically black colleges and universities and hispanic-serving institutions about venture capital and technology entrepreneurship. Intel will help mentor and train students as part of the partnership.

That said, let’s give you some context on what this means for the general corporate investment scene, which seems to be popping up in tech headlines everywhere we look.

Some Context For You

As you might glean from our recent coverage of corporations showing interest in investing in industry newcomers, the space seems to be heating up.

Take Starbucks, which poured $100 million into a food-focused startup fund last month, or Chipotle, which is running an accelerator powered by its foundation to help sustainable startups learn how to scale.

From a different perspective, we see mature funds doubling down on startup investment. Just last week, Chevron Ventures, born in 1999, announced plans to throw $90 million into a group of energy startups. This, along with Intel Capital, which began in 1991, points to a similar narrative: large corporations with interests in new technology are funneling resources into startups. For many reasons, these corporate funds have the ability to do more than just a burrito-powered workshop, and that’s a pattern we’re tracking.

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Bigger companies have, to some extent or another, been investing in startups since . Over the years, the pace has picked up considerably. U.S. blue chips are on pace to set a record for venture and PE investing this year.

To this end, we set out to find out which corporations made the most venture investments so far in 2018.

Based on recently pulled investment data from Crunchbase, we totaled corporate venture investments made directly by the corporation as well as its subsidiary venture investment funds. Our findings can be found in the chart below.

In Crunchbase News’s prior forays into covering prolific corporate investors, we’ve found that big technology companies were typically top-ranked on counts of investments as well as exits, and acquisitions.

In a way, that’s no different here. Alphabet and its maze of investment-making subsidiaries (including , , , and ) comes out on top so far this year. , historically among the most prolific venture investors, corporate or not, comes in third. , which mostly investments out of its arm, is ranked fourth overall so far.1 And , which so far this year has made out of its alone, comes in to round out the top five.

However, the real surprise here is , which has participated in enough venture deals to land the investment bank firmly in the number two spot so far in 2018. Although Goldman Sachs is not a corporate venture investor in the traditional sense (even when compared to other big banks, many of which run their own venture funds), it’s nonetheless a corporation investing in startups.

And boy has GS2 ramped up its venture investing pace over time.

So far in 2018, Goldman Sachs has disclosed 52 venture and PE deals—the most activity on Goldman Sach’s private market desk since the Dot Com bubble. But it’s still far from its prior peak of 117 venture and PE deals made in 2000.

In Q3 2018, Goldman Sachs has made more venture and PE deals than any time in the past decade. GS’s disclosed private-market deal volume is currently higher than it was in Q1 2008, right before the financial crisis came to a head when Bear Stearns and Lehman Brothers collapsed.

The investment bank has also cashed out on some prior investments this year.

is a decent example. Goldman led in 2012, which valued the company at $3 billion post-money. “less than half its stake” in the then-private music streaming company for $75 million in August 2017 at a valuation of about $13 billion. Spotify listed its shares publicly this year and is currently valued at approximately , according to Yahoo Finance.

But Goldman Sachs isn’t the only major Wall Street firm to dive headlong into private-market investing either.

’s 2018 include positions in Dropbox, SurveyMonkey, and Xiaomi. was a co-investor with JP Morgan, and additionally was exposed to and �ٴdz���’s rather ignominious IPO.

Two subsidiaries of Fidelity Investments—health-focused investment fund and growth-stage investor —are also investing at near-record pace. F-Prime’s Q3 2018 —11, at time of writing—is level with prior highs.

Mentioning these historical high water marks isn’t to say we’re in a bubble right now.. But we are in the midst of a historic reorientation in the startup market, and the fact that fuddy-duddy Wall Street firms with deep pockets and connections to public markets are now among the most active investors is testament to that shift.

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