Corporate venturing: Innovate and grow new businesses from Singapore

Rapid disruption is putting immense pressure on companies to find new avenues for growth. Executive Vice President, New Ventures and Innovation Heng Tong Choo shares a winning approach for companies to tackle this challenge – corporate venturing. Find out about the strategy and how the New Ventures team – the arm of EDB that catalyses corporate venturing in Singapore – supports businesses in their journey through capital, expertise and networks.

Over the last decade, we’ve seen some of the world’s most established industries upended by technology-driven upstarts. Think Grab in ride hailing, Airbnb in hospitality, and Amazon in retail.

While this “creative destruction” has brought about many modern conveniences, a ticking clock has also been set for many businesses. By 2027, the average age of S&P 500 corporates will fall by 50% to just 12 years.

Savvy executives are acting now to secure their business’ future, with 52% of them placing business building as a top-three or higher priority for growth. An increasingly essential avenue for these C-suites is corporate venturing – the endeavour of building new businesses from within one’s company to create new revenue streams beyond one’s core business.

Charting a path to new growth

We’ve seen corporate venturing in action many times. Take for example tech giant Alphabet, which has now successfully created a range of new businesses in Waymo for autonomous vehicles and Verily for health sciences data and research.

In short, think of corporate venturing as a business channelling resources and its advantages to growing its own startup:

 

How successful have corporates been?

With that said, many might wonder about their chances of success. Bain & Company’s research shows that while only 1 in 500 startups succeed, the success rate for corporates sharply increases to 1 in 8. This is where the “corporate advantage” comes into play – a combination of an enterprise’s existing resources, expertise, networks and talent. Corporates can also harness external expertise and resources within the ecosystem to elevate their success rate.

Leveraging the resources of a corporate and launching multiple ventures is another strategy to bolster success and manage risk across a portfolio of ventures. McKinsey reports that companies that have launched at least four new businesses in the past 10 years have nearly double the chance to generate five times the return on their investment than less frequent business builders.

Global consumer internet company Sea is one such company. Starting off as gaming platform Garena, the company ventured into the e-commerce space with Shopee shortly after. Buoyed by its success, the firm launched its digital payments and financial services platform – SeaMoney – to capture opportunities in the fintech space.

Growing momentum

While corporate venturing is in its budding stages, momentum is quickly growing in Singapore. Over the last two years, more than 40 ventures have been launched here and some of the world’s most established corporates have already started their journey:

• Bosch: Set up its intrapreneur accelerator program and grow incubator for Southeast Asia in Singapore.
• ENGIE: Launched a dedicated venture building arm which looks to start a series of zero-carbon startups over the next three years.
• P&G: Set up Growthworks and dedicated $12 million to tapping on “intrapreneurs” to grow at least three new global brands with billion-dollar revenue opportunities.
• Schneider Electric: Committed at least $16 million to develop up to four new ventures and set up its business incubation team in Singapore.

For these firms, Singapore’s economic fundamentals – robust funding landscape, network of established companies, connectivity and infrastructure – are factors that convinced them to start their corporate venturing efforts here.

With that said, starting a corporate venture is easier said than done. In my team’s journey of supporting businesses in their venturing efforts, the 150 companies we’ve spoken to shared some of their common struggles:

• Acquiring market knowledge, capabilities and connections
• Securing buy-in from senior management and the board
• Finding the right balance between control and autonomy of the venture, such as incentivising venture teams and the level of external fundraising to take on
• Improving ROI on corporate venturing and calibrating for risks
• Tapping into the right networks for venture development, scaling and talent sourcing

The journey is certainly challenging, but it need not be taken alone. EDB New Ventures was set up precisely to partner corporates on this journey and accelerate the pace of corporate venturing in Singapore. Have a gander at the infographic below to learn how we help companies who are ready start their corporate venturing journeys:

Ride the next wave of growth with New Ventures

It’s time to seek out new avenues for growth and corporate venturing is one of the best places to start. 

For businesses keen on taking their first step, EDB has launched its Corporate Venture Launchpad programme to help you start a new venture from Singapore within six months. Find out more about how the programme provides co-funding opportunities, expertise from venture studios and more by clicking here.

If you’re keen on finding out more about corporate venturing in Singapore and how we can support you, feel free to reach out to us at new_ventures@edb.gov.sg. Happy to chat anytime!