#Fintech

Secondary Markets Amidst Decreased Insurtech Funding

The Rise of Secondary Markets Amidst Decreased Insurtech Funding

The Insurtech sector, once a magnet for venture capital (VC) funding due to its potential to revolutionize the insurance industry, has recently experienced a significant slowdown in new investments. Economic uncertainties and a more cautious investor mindset have contributed to this decline in primary market activity. As a result, secondary markets—where stakeholders can trade existing shares of private Insurtech companies—have become increasingly important. These markets now serve as a critical source of liquidity for investors and employees, especially as securing new funding rounds becomes more challenging.

A Shift in Insurtech Investment Dynamics

The Insurtech industry, known for its innovation in streamlining and digitizing traditional insurance services, has been notably affected by the broader economic downturn. According to Fintech Global, funding for Insurtech companies in the U.S. dropped by 67% year-over-year, reflecting a shift from growth-oriented investments to a focus on profitability. This change in investment strategy has left many Insurtech firms struggling to raise new capital. In this environment, secondary markets have emerged as a vital alternative, providing a means for stakeholders to realize value from their investments when primary market opportunities are scarce.

With companies staying private longer and facing challenges in attracting new capital, secondary transactions offer a crucial lifeline. Early investors and employees can turn to these markets for liquidity, as traditional funding rounds become more difficult to secure. This trend is supported by BCG, which notes that the Insurtech hot streak has cooled, underscoring the necessity of alternative liquidity solutions.

Secondary Markets as a Response to Funding Challenges

The slowdown in Insurtech funding has led to significant discounts in secondary market valuations. According to Insurance Business Magazine, many Insurtech companies are trading at valuations up to 40% lower than their last funding rounds. This reflects the broader challenges these companies face in securing new capital. Despite these discounts, investor interest in secondary Insurtech shares remains strong, driven by the potential for long-term gains once market conditions improve.

Secondary markets provide investors with a more affordable entry point into the Insurtech sector, which continues to be seen as a high-risk, high-reward industry. The attractiveness of these markets is heightened by the correction in primary market valuations from their previous highs. For Insurtech companies, engaging in secondary market transactions not only helps sustain investor interest but also provides much-needed liquidity to employees holding stock options, which might otherwise be difficult to monetize. Insights from Tenity reinforce the role of secondary markets in offering liquidity solutions amidst a challenging funding environment.

Looking Ahead: The Future of Insurtech Secondary Markets

As the Insurtech industry continues to navigate through a period of reduced funding, secondary markets are expected to play an increasingly critical role. The anticipated recovery of the IPO market could provide better pricing benchmarks, potentially stabilizing valuations and making secondary investments more appealing. However, until that recovery materializes, secondary markets will remain a key mechanism for liquidity in the Insurtech sector.

Moreover, as Insurtech companies mature and look for ways to sustain growth without relying solely on new VC rounds, secondary markets will provide a necessary outlet for early investors and employees to capitalize on their holdings. This trend is likely to persist, particularly as Insurtech continues to attract attention for its innovative potential and the ongoing digital transformation of the insurance industry. Insurance Times, highlights that while funding has plummeted, secondary markets are stepping in to offer much-needed support and liquidity.

In conclusion, the decline in Insurtech funding has underscored the growing importance of secondary markets as a vital tool for liquidity and investment. As the Insurtech industry adapts to new financial realities, secondary markets are poised to remain central to its continued growth and evolution.

Sources:

  1. Funding for Insurtech companies in US dropped by 67% YoY as investors pull back - Fintech Global

  2. Insurtech’s Hot Streak Has Ended. What’s Next? - BCG

  3. Global Insurtech funding falls below $1 billion in Q1 2024 - Insurance Business Magazine

  4. Insurtech funding: The state of Insurtech in 2024 - Tenity

  5. US Insurtech investment activity in freefall as funding declined 78% YoY - FinTech Global

  6. Insurtech funding plummets in Q1 2024 - Insurance Times

Web Summit 2022 wrap-up #5: CLIMATE TECH, A TRILLION DOLLAR OPPORTUNITY

Welcome to our series of articles on the recent Web Summit 2022, a premier event in the tech industry. In this series, we will be highlighting some of the most exciting and interesting presentations, panels, and events that took place at the conference. From keynotes by industry leaders to breakout sessions covering the latest trends and developments in technology, there was no shortage of thought-provoking content at this year's conference. We hope you enjoy reading about the Web Summit 2022 as much as we enjoyed attending it!

Climate tech, a trillion-dollar opportunity

At the 2022 WebSummit, Nick de la Forge (Co-Founder of Planet A Ventures) and Seth Bannon (Founding Partner at Fifty Years) shared their insights on the opportunities offered by climate tech VC. Only in the first half of 2022, $26 billion were already committed to by investors across over 900 companies and startups developing climate tech solutions. This makes it one of the hottest venture capital and private equity sectors, which creates incredible opportunities in terms of both impact and financial returns.

Climate Tech Web Summit 2022

Which climate tech investment(s) should you focus on ?

Serious funding, policy efforts and resources are being deployed by governments across the board to boost the profitability and scaling of sustainability-focused ventures. Renewable energy and climate change adaptation are the trends to look out for. Within the financial industry’s efforts towards a more sustainable future, new technology in those areas will be crucial to curb global warming.

According to the panelists, finally, businesses working to actively reduce greenhouse gas emissions throughout their supply chains will gain a massive competitive advantage in the decade to come. They also underlined the fact that more lobbying in favor of the climate industry will be vital to its long-term growth.

 

Feel free to contact us to discuss a partnership or for more information about this article.

Minh Q. Tran, minh@mandalorepartners.com

Web Summit 2022 wrap-up #4: N26, What’s next for digital banking?

Welcome to our series of articles on the recent Web Summit 2022, a premier event in the tech industry. In this series, we will be highlighting some of the most exciting and interesting presentations, panels, and events that took place at the conference. From keynotes by industry leaders to breakout sessions covering the latest trends and developments in technology, there was no shortage of thought-provoking content at this year's conference. We hope you enjoy reading about the Web Summit 2022 as much as we enjoyed attending it!

N26, What’s next for digital banking?

In this session, Maximilian Taynthal, Co-Founder of N26 and Patricia Kowsmann, Finance reporter at The Wall Stret Jounal talk about what the future holds for digital banking, and how neobanks are closing the gap between them and traditional bank.

Web Summit N26

Over the last few years, the rise of the neobank has shown no sign of slowing down, and we're currently in an era of innovation that is reshaping how consumers interact with their banks. 

About N26

N26 is a German neobank founded in 2013. It offers a 100% digital banking experience designed to be simple, transparent, and secure. Actually, N26 has more than 8 million customers.  

If you want to learn more about the company, here is his website: https://n26.com/en-eu. 

What kinds of banking services do online banks offer?

With online banking, you can transfer money, exchange crypto, make online payment or pay bills via your bank card, and deposit your money. But unlike traditional banks, they can’t give loans. 

Digital banks are well known to offer lower fees so concretely how can online banks be profitable?

By their clients' deposit, banks like N26 can invest in profitable business. They make sure that it’s risk free, so their clients don’t have to worry about anything. 

In the future, digital banks even plan to remunerate their clients by sharing the benefit from their deposit. 

The pandemic situation, inflation, war, ... Did those situations infect digital banking?

It didn’t. It was even positive, digital banks got more revenue. Easy to use, digital banking’s clients can access their bank account just via their online account or via their mobile banking app. So that is the real difference of digital banking with traditional banking, they prioritize customer experience. 

What are online banking challenges?

They want to expand in more countries, get more customers, be more profitable, developpe their products, but their biggest challenge is to be completely independent of external funding! 

 

Feel free to contact us to discuss a partnership or for more information about this article.

Minh Q. Tran, minh@mandalorepartners.com

Web Summit 2022 wrap-up #3: Cultivating investor relationships and long-term partnerships

Welcome to our series of articles on the recent Web Summit 2022, a premier event in the tech industry. In this series, we will be highlighting some of the most exciting and interesting presentations, panels, and events that took place at the conference. From keynotes by industry leaders to breakout sessions covering the latest trends and developments in technology, there was no shortage of thought-provoking content at this year's conference. We hope you enjoy reading about the Web Summit 2022 as much as we enjoyed attending it!

CULTIVATING VC INVESTOR RELATIONSHIPS AND LONG-TERM PARTNERSHIPS

In their panel on “Cultivating investor relationships and long-term partnerships” at the 2022 WebSummit, Harry Nelis of Accel Partners and Samir Desai, the founder of Super Payments, discussed what it takes for a start-up to find (and to attract) the right venture capitalists.

How to find right VC investors?

Warm introductions to VC firms

Both panelists highlighted the importance of warm introductions in the venture capital field. A market of a few is all you need when you are starting off : despite the truckload of rejections you may face from the venture capital industry as a whole, it is important to keep networking and to be resilient. Early stage companies will all eventually find the right venture capital firm, who will be interested enough to help them raise money. Harry Nelis also highlighted how, at his venture capital fund, most of the selected projects came from warm introductions.  Venture firms expect a great track record from founders as well, which can help secure additional capital. The slow-down in the VC investments market is also no reason to worry, according to the panelists : successful startups have been know to stem from times of crisis, and there is, in fact, a lot of money out available from many VC funds.

On sales skills and choosing the right VC fund  

It is no secret that great sales skills matter to close venture capital deals: venture capital investors look for ambitious, tenacious and convincing people, who they know will put vc money to good use. But startup founders are not necessarily great salespersons right off the bat ; according to Samir Desai, successful venture funding relies on being able to present a small reliable team, very involved in the company’s management, to angel investors — thus build a true identity for your company. One-on-one trusted collaboration is most important to raise startup funding, which is why engaging with outside contractors for sales is not necessarily recommended. Finally, the choice of the VC firm matters, especially for early stage startups — beyond initial vc funding rounds, it is crucial for the goals and characteristics of the venture capitalist to match the project. Hence, top VC firms should be researched and referenced, making sure they’re the right fit before you pitch for new companies to start building solid relationships with their investors. 




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Minh Q. Tran, minh@mandalorepartners.com

Web Summit 2022 wrap-up #2: TO INFINITY AND BEYOND: BEST USE CASES IN WEB3

Welcome to our series of articles on the recent Web Summit 2022, a premier event in the tech industry. In this series, we will be highlighting some of the most exciting and interesting presentations, panels, and events that took place at the conference. From keynotes by industry leaders to breakout sessions covering the latest trends and developments in technology, there was no shortage of thought-provoking content at this year's conference. We hope you enjoy reading about the Web Summit 2022 as much as we enjoyed attending it!

TO INFINITY AND BEYOND: BEST USE CASES IN WEB3

The Web summit 2022, held in Lisbon between November 1 and November 4 gathered many corporates, startups and influencers specialized in the Internet. It was also the occasion to explore the possibilities of Web3 in various fields, especially in marketing strategy.

On the 2nd of November, Marty Swant gave the opportunity to Sandy Carter (Unstoppable Domains), Amanda Cassatt (Serotonin) and Jeremiah Owyang (RLY Network Association) to share their views on marketing and Web3.

Web Summit Lisbon 2022 use cases in Web3

Web1, Web2, Web3: what are the main differences?

To better understand the new marketing strategies to be used in Web3, it is important to briefly reconsider the evolution of World wide web.

Web1, the origins of the Internet

Web1 was the first version of the Internet. It was a confidential and complicated system, only used by those who were able to code. At this time, the general public was not able to see the use cases of it and to measure its impact in their daily life.

Web2, the democratization of the Internet

Web2 is the Internet we know today. Way more user-friendly than the previous one, its adoption rate has been tremendous. Web2 has changed our everyday life, and companies heavily rely on it for selling their products. Every user can generate and gain access to content.

Web3, a broad new paradigm

Web3 is still in its early days,  and will definitely reshape our usage of social media and the Internet. With Web3, every user become the owner of its own content, and can control it. Instead of relying on CEO of large technology companies such as Twitter, Web3 allows us to create communities and have ownership over the Internet. Web3 produces decentralized autonomous organizations and redefine our use of online services.

Compared to current internet, Web3 adoption growth rate is impressive. Today, around 40% of South Asia has already adopted it, and 15% in the US. To make another comparison, the NFT trading volumes grow by 21000% in 2021, a way bigger growth than Web2’s one when Bezos launched Amazon.

Why do traditional companies struggle to adapt to decentralized web?

Companies need to change their marketing strategy in order to adapt to Web3. Decentralized blockchains, cryptocurrencies, NFT and metaverse are new game changers in the marketing field.

Companies need to change their marketing paradigm

Traditionally, companies have a short-term view on the return of a digital marketing campaign. In Web2, marketing efforts are all about reducing Customer Acquisition Cost (with the cost of targeted ads for instance) while maximizing Customer Lifetime Value (CLV).

In a Web3 paradigm, we shift to a user generated content model. Marketing is all about building a strong decentralized community that will use Web 3.0 to make content about the brand.

If traditional social media platforms are still used to discuss about Web 3.0, we will see in the near future new Web3 native social media platforms.

What should companies do to enter in web 3.0?

Start now

The common view between our panel specialists is that every company should start to create their web3 strategy today, because time will be needed to reap the benefits of it.

The best way to start, according to Sandy Carter, is to think deeply about its Web 3.0 identity, by showing to its community the desire to integrate web3.

Focus on what does the customer want

Web3 is not a magic solution and is useful only if it really helps customers. A company needs to have a very user-centric approach to provide services that are really useful to the next generation, and not only to be part of the decentralized internet race. So many products are built on a nonexistent customer demand!

Incentivize customers smartly

In Web 3.0, users are owners of their data. To gain access to this precious data, companies need to incentivized people correctly. It is the only way to build a real community where user generates content and help your brand to grow.

 


Feel free to contact us to discuss a partnership or for more information about this article.

Minh Q. Tran, minh@mandalorepartners.com

Web Summit 2022 wrap-up #1: FINTECH 2023: WHAT NEXT?

Welcome to our series of articles on the recent Web Summit 2022, a premier event in the tech industry. In this series, we will be highlighting some of the most exciting and interesting presentations, panels, and events that took place at the conference. From keynotes by industry leaders to breakout sessions covering the latest trends and developments in technology, there was no shortage of thought-provoking content at this year's conference. We hope you enjoy reading about the Web Summit 2022 as much as we enjoyed attending it!

FINTECH 2023: WHAT NEXT?

At the 2022 Web Summit that took place last November, in a talk led by the journalist Nick Huber, Carolyn Rodz (Founder at Hello Alice), Rodolphe Ardant (Co-founder & CEO at Spendesk) and Tegan Kline (Co-founder at Edge & Node) discussed the future of the fintech market in the incoming year.

2021 was the year of growth, what’s next for Fintech in 2023?

After a successful record growth in 2021, it seems that the fintech industry is facing tough times. But what is the reality of the fintech market, its challenges, and opportunities?

 If we look at the current market, fintechs were founded because the banks were incapable or did not want to take advantage of technology. According to Rodolphe Ardant, this is just the beginning of the fintech world: indeed, the public traded fintech is on average 12 years old while the legacy financial services in 90 years old. Moreover, Tegan Kline explains that there are a lot of opportunities in the fintech market, for example taking advantages of interest rates growing. We are just at the beginning of the disruption in the finance world.

 In the past 10 years, we saw many different business models emerge, and some business models will come up stronger after the crisis (such as B2B payment or banking software). The market should come back, and fintechs should ask themselves how to work with the major players in finance (especially banks and goverments) and not against them, while keeping focusing on individuals’ needs.

TRENDS OF FINTECH 2023: FREEDOM OF CHOICE

According to Carolyn Rodz, the reality of the market is that we all want the freedom of choice, and this is fintech is all about. It is hard to predict how the market will respond in 2023, but the valuations may come down within the fintech industry, the users will remain, which would leave a lot of opportunities to get into emerging businesses.

For Tegan Kline, there is a great opportunity within the NFT space within cryptos, and we could likely see a lot of fintech getting into that space. In addition, we would see the emergence of fintech using the metaverse, decentralizing and giving the power back to the users.

For Carolyn Rodz, the focus should be on anything that support open banking, community and human engagement (such as identity verification, data transferring, …).

Feel free to contact us to discuss a partnership or for more information about this article.

Minh Q. Tran, minh@mandalorepartners.com

Insurance Trends in Asia: A Bright Future For Insurtechs? #VC

Insurance in Asia has extremely high growth potential…

Insurtech and insurance in general has extremely high growth prospects in the region, much more so than in other more mature markets like Europe. 

Over 40% of the middle class population in Southeast Asia is uninsured: the scope of penetration for digitally charged insurance businesses through technology mediums like smartphones is huge. As standards of living rise and health concerns (for example linked to the pandemic) remain a preponderant issue, we expect demand for insurance products to increase. Penetration rates for Asia-Pacific stood at 3.8% for life insurance and 2.1% for non-life insurance in 2018, considerably lower than in the UK and the US that reported rates of over 10%. Insurance company Swiss Re estimates that by 2029, 42% of gross insurance premiums would originate from Asia-Pacific, with China accounting for 20% of this. Asian consumers are increasingly looking at insurance not just as a protection but also as an investment option.

This is likely to lead to significant revenue growth for actors in this industry, as shown above by the projection of the evolution of premiums in the coming years. 

….providing a unique opportunity for the development of insurtechs…

According to McKinsey, insurance companies in Asia are therefore very aggressive in terms of growth prospects, and insurtech can be a key way to rapidly reach under-served consumers.

The key point is that while there is a very large potential for growth, it may not be best served by traditional insurers. As shown above, customers now prefer digital solutions.  This is where insurtechs can play a major role. 

Indeed, VC funding in the sector has reached large levels in recent years. Venture capital has also recognized the potential profits to be made from digitally disrupting insurance. According to a paper by Bain,  in the past five years, venture capital firms have invested about $3.8 billion in Asia-Pacific insurtechs, including online sites that sell directly to the public, online brokers and advisers, and aggregators or digital marketplaces.

According to the report, in fast-growing markets such as mainland China, India and Indonesia, insurtechs can “leapfrog” incumbents and gain market share. Digital marketplaces, which allow customers to easily compare and select policies from competing carriers, may be able to conquer a significant share of the insurance profit pool. In major markets around the world, a majority of retail insurance customers—especially young, digitally active ones—are open to switching to another provider, including companies from outside the industry, such as retailers, automakers or tech firms, according to Bain & Company’s fourth global survey of more than 174,000 customers in 18 countries (“Customer Behavior and Loyalty in Insurance: Global Edition 2018”). Asia-Pacific insurance consumers are very receptive to new ideas and new players. In Thailand, Indonesia, mainland China and Malaysia, for example, more than 85% are open to buying from new entrants, according to Bain’s survey.

…which for now remain concentrated in mainland China, Hong Kong and other East Asian countries. However a key trend for coming years will be the emergence of new markets

Banks in financial hubs of SouthAsia, Singapore, and Hong Kong have already received significant investments in Insurtech: For example, DBS bank from Manulife of 1.2 Billion dollars, Citibank from AIA group 800 Million dollars and Standard Charted from Prudential 1.25 Billion dollars.

Singapore and Hongkong are providing a wide range of development and growth options like incubators, insurance labs and more for startups in the insurtech sector.

Asian Insurtechs startups and CVC

Examples of insurtech startups from around the region

As shown above, a number of high potential ventures have developed around the region. For instance, China is also seeking to build up big online platforms to provide various insurance options personal, medical, auto online. Malaysia has already started reaping the benefits of such platforms by slowly reducing the need for live agents.

Nonetheless, other markets are also seeing the development of insurtechs. For example, insurtech funding in India has increased from only 11 million USD in 2016 to 287 million in 2020, with startups such as Turtlemint which raised 30 million in late 2020. 

Insurtech can help the sector remove obstacles to growth…

According to McKinsey, Asian insurers currently tend to suffer from three main weaknesses: 

Sales force professionalization. The entire US insurance industry, as one example, has a few hundred thousand agents. Agency forces in Asia are significantly larger—China alone has roughly eight million insurance agents. However, the level of professionalization in Asia lags behind the developed world. Part-time and poorly trained agents are the norm in much of Asia. As customers continue to grow more sophisticated, Asian carriers will have to upgrade their agency forces. They can learn much from the West in terms of recruiting, capability building, and ongoing performance- and compliance-management. Western carriers are now helping agents migrate from product sellers to holistic advisors which provides a blueprint for Asia.

Analytics-driven decision making. The West is increasingly applying data and analytics in all elements of the business to improve the quality and consistency of decision making. In some cases, this has progressed to rely extensively on third-party data. In Asia, the use of data and analytics is less mature. Carriers need to invest in their internal data assets (i.e., capturing and storing more useful data), external third-party data integration, advanced analytics capabilities, and “last mile” adoption of analytics solutions. There is tremendous opportunity for carriers in all elements of the value chain, including pricing and underwriting, sales force effectiveness, customer servicing, and claims. Given the distributed nature of insurance operations in Asia and the talent gap, this is an even bigger opportunity.

Operational discipline and efficiency. Asian carriers can learn from the operational discipline of insurers in developed markets. Faced with the prospect of slower growth, Western insurers have long focused on improving efficiency through more optimized operations. Asian executives have underinvested in operational discipline and efficiency. It is not uncommon to find dozens of branches or field offices with widely varying operating practices. This increases costs, delivers suboptimal customer experience, and introduces significant compliance risk. Asian carriers will have to focus more time and investment on these issues in the near future. They can benefit from the new toolbox that has emerged which combines digital, analytics, robotics, and NLP to re-invent customer and back office journeys.

… and artificial intelligence is a key driver of change

The advancement of Artificial Intelligence (A.I) allows for much faster understanding of this data. This empowers intermediaries and underwriters to engage clients knowledgeable with data driven policy advice in real time.

Customers want to connect with insurers from virtually anywhere and at any time. The employment of AI processing will soon permeate almost every facet of the insurance business. For example, the insurer QBE Asia has “started seeing benefits from integrated AI systems that streamline and automate our claims workflow and reduce costs by consolidating the underwriting processes on a centralized platform”. They also deploy Robotic Process Automation to save significant costs on repetitive non-value adding tasks and have started to actively integrate connected devices (Internet of Things, IoT) into their insurance processes.

Finally, public authorities are likely to modify and adapt regulations in reaction to the development of digital insurance and insurtechs

According to Bain, “digital disruption is getting a push from regulators. In Singapore, Hong Kong and, more recently, Indonesia, authorities are actively promoting digital innovation and have established government funded incubators, known locally as sandboxes, to encourage insurers to experiment with new technologies”. Singapore and Hong Kong are emerging as hubs for telematics and insurtechs, and consumer use of digital channels in those markets is growing rapidly. This means new regulations are likely to be put in place, and insurtechs should prepare for this risk.

Le Corporate Venture Capital dans la bancassurance #VC

La bancassurance est parmi les secteurs les plus actifs dans le CVC au niveau mondial…

Alors que le Corporate Venture Capital (CVC) est en plein développement à l’échelle mondiale, comme indiqué par le dernier rapport CB Insights sur le sujet, le secteur de la bancassurance se confirme comme une des références, dans le monde comme en France.

En effet, si on examine les principaux investisseurs CVC dans le monde, on remarque la présence de nombreux acteurs des industries financières, comme Goldman Sachs et Fidelity, tandis que des entreprises étrangères dans ce secteur, comme SoftBank et Alibaba, investissent des montants considérables dans les services financiers.

…. et impliquant principalement des investissement en fintech ou insurtech, tout en s'intéressant également à des secteurs non financiers

Les fintechs et autres startups liées à la finance restent une priorité pour la plus grande partie des banques. Comme l'indique le graphique ci-dessous, les principales institutions financières américaines ont grandement augmenté le nombre d'investissements dans des start up dans les innovations financières. Néanmoins, des organisations financières comme Goldman Sachs ou des AM comme Fidelity n'hésitent pas à investir dans des startups diverses, allant de la santé aux médias. Par exemple, en 2020 Citi Ventures a mis en place un fonds d'investissement de 150 millions de dollars dédié à l'impact investing.

Cela est également visible en France, avec une transition graduelle vers des portefeuilles de plus en plus généralistes, même si la stratégie pour la plupart des acteurs semble toujours clairement ancrée sur leurs métiers historiques. Par exemple, au sein du portfolio de SG Ventures (l’entité d’investissement en capital-risque de la Société Générale), toutes les startups sont liées soit à l’assurance, soit à la banque soit à la mobilité, qui est l’une des activités de la Société Générale à travers sa filiale ALD.

En France également, les entreprises de services financiers sont les moteurs du CVC, et s’organisent selon deux modalités principales

Les acteurs de la banque et de l’assurance sont parmi les plus actifs de l'écosystème CVC en France, et représentent une proportion importante des investissements corporate dans des startups innovantes. Leurs objectifs sont à la fois stratégiques, mais aussi financiers, et leurs investissements, initialement centrés uniquement sur leur cœur de métier, ont tendance à se diversifier de plus en plus.

Les sociétés du secteur de l'assurance sont les acteurs les plus prolifiques du paysage CVC hexagonal. De même, les banques françaises sont relativement actives dans le secteur du corporate venture capital. Certaines d'entre elles sont d'ailleurs parmi les principaux investisseurs en France. Par exemple, en 2017 le Crédit Agricole était troisième, à égalité avec Partech, un des principaux fonds de venture capital en Europe. Certaines banques ont été particulièrement précoces et pro-actives dans leur stratégie de financement de l'innovation, et il existe une hétérogénéité importante dans les montants investis et la diversité des portefeuilles.

Investissements réalisés par différents groupes bancaires français (avant 2017)

Le positionnement unique de Mandalore Partners:

VC-as-a-Service: Benchmark of the sector & Strategic Positioning of Mandalore Partners #VC #VCaaS

Venture capital (VC) is a form of investment for early-stage, innovative businesses with strong growth potential. Often led by funds, Venture Capital investments are not for the faint of heart.

However, VC investments can be a fully outsourced service build new, in-house VC capabilities for Corporations, family offices or Business Angels. Known as VC-as-a-Service, the demand for such a service is booming.

Why ?

Corporate venture capital (CVC) is the investment of corporate funds directly in external startup companies.

CVC is beneficial for corporations for two aspects:

  • From a strategic point of view, CVC represents a true external source of innovation and enables an active monitoring of the sector’s future evolutions for corporations. CVC is also allowing corporations to attract the best profiles willing to work in a dynamic environment.

  • From a financial perspective, CVC often leads to return on investment. As for classical VC investment, CVC investments are generally characterized as very high-risk/high-return opportunities.

CVC is also a great opportunity for start-ups. More than getting only financial resources like with VC funds, they can get the optimal mix of capital and business value from the corporations. Indeed, start-ups have access to the fund’s financial expertise but also to the corporations’ knowledge about the sector.

Thus, CVC is a win-win solution for both corporations and start-ups. However, this solution is hard to implement in real life.

Indeed, VC abilities requires a lot of time, resources, contacts in the start-up ecosystem to have access to a strong deal flow, expertise for deep innovative analysis, expertise about legal aspects of VC investments. Corporations do not always have all those assets in-house.

Moreover, a misalignment of purposes can rise between the financial and strategic department of a large corporations due to the high-risk nature of VC investments. Besides, once the investment done, the gap between conservative mindsets in corporations and agile ones in start-ups may not be profit holder for both.

As CVC is very hard to implement, one may wonder on the way to deal with it.

How ?

Many actors are offering external services to enable corporations to have access to VC abilities for investments.

Each actor offers VC-as-a-Service abilities, some are pure players like Touchdown Ventures, some are bringing also a consulting expertise like McKinsey and Mandalore Partners is bringing a Digital Ecosystem along with its VC abilities.

There are three different categories of actors offering VC-as-a-Service abilities.

  • Pure players like Touchdown Ventures. Among this category, pure players are often multi-sector oriented and operate at a local scale like Techmind or at a global scale like Pegasus Ventures.

  • Consulting groups like Bain are bringing along their CVC abilities some of their consulting expertise. They operate at a global scale and on many sectors but mostly digital ones (TMT).

  • Mandalore Partners is a pure player but also brings its Digital Ecosystem along with its VC abilities. Mandalore has a global expertise and is specialized in Insurtech.

What ?

The objective of VC-as-a-Service is to bring VC abilities to corporations and start-ups:

Sourcing is one of the hardest abilities to acquire when a corporation wants to acquire VC skills. Indeed, it requires a lot of time and relations to build an efficient network. Using VC-as-a-Service gives corporations access to top-notch deals. VC-as-a-Service also quickly identify startups that fit within the strategic roadmap of the corporate partners thanks to previous deals and accumulated experiences.

More than Sourcing, VC-as-a-Service also brings a structure and a platform to rely on. Indeed, VC-as-a-Service funds have financial expertise, fine knowledge of the sector and contacts to find the best diligence as possible.

An efficient CVC investment is not finished when the start-up has received the funds from the company. VC-as-a-Service funds also follows the portfolio of the company and helps the start-up in its future milestone.

Using a VC-as-a-Service fund is in fact time saving and cost effective. It only takes few weeks to launch and to follow a CVC strategy for a corporation.

All along the investment process, decisions are made by the corporate which is enlighten by VC-as-a-Service fund. The fund is not making any investment alone.

Le CVC, un secteur en pleine expansion

D'après l’article paru sur TechCrunch en mars 2022. 


Le boom d’investissements en capital risque qui a marqué l’année 2021 n’a pas été uniquement le fait de fonds en capital risque traditionnels. En effet, d’autres acteurs et sources de capital ont joué un rôle clé: des nouvelles méthodes d’investissements angel et seed, jusqu’à des fonds crossover qui soutiennent des startups late stage. Et au milieu de toute cette activité frénétique et des levées records, les investisseurs corporate ont continué à développer leurs importance au sein du paysage VC. 

Corporate Venture Capital (CVC) est la méthode par laquelle des entreprises mettent en place leur propre structure d’investissement. Traditionnellement, cette démarche unit des objectifs stratégiques (M&A, accès à la technologie, partenariats) et financiers (retours sur investissement). La pondération de chacun varie en fonction de l’entreprise et du développement de leurs équipes CVC, mais il est rare de trouver des CVC qui n’ont qu’un de ces objectifs. Cela fait de leurs investissements un intéressant mélange d’investissement en capital risque classique et action stratégique de l’entreprise. Du point de vue des startups, le CVC est également très attractif. Par exemple, cela leur permet de s’adosser à un partenaire expérimenté, et donc de bénéficier de ses ressources, réseaux et expériences. La perspective d'être potentiellement racheté par le corporate offre également une sortie attrayante pour les entrepreneurs et les investisseurs. 


Les CVCs étaient exceptionnellement actifs l’année dernière, et il n’y a jamais eu autant d’acteurs. Si on analyse les données publiées par CB Insights, il est clair que 2021 fut une année charnière pour ce secteur, avec des records battus dans la plupart des indicateurs. Les CVC sont également de plus en plus présents au sein de l’espace médiatique. Par exemple, MondoDB, une startup de codage qui a fait son introduction en bourse il y a cinq ans, a mis en place son propre fond. MondoDB et d’autres startups à succès comme Coinbase sont intéressantes car elles sont actives dans le CVC avant même d’atteindre le statut d’entreprise mature et établie. Cette dynamique ne s'arrête pas là, et le CVC n’est désormais plus cantonné à une poignée de multinationales comme Axa et General Electric. Maintenant, même des entreprises privées plus petites s’y mettent, ce qui met en évidence à la fois les délais de plus en plus larges avant les IPOs, et l’abondance de fonds disponibles pour être utilisés en VC. 


Examinons maintenant les données du secteur de manière plus précise. Il y a deux indicateurs principaux pour examiner l'évolution du secteur. Tout d’abord, le nombre et la rapidité avec laquelle de nouveaux CVC sont mis en place, et le rythme auquel ceux déjà existants investissent. Si on examine le premier indicateur, il est clair que nous assistons, ces dernières années, à une expansion sans précédent du secteur. Selon CB Insights, il y a eu 221 nouvelles structures CVC, un chiffre en augmentation de 53% par rapport à 2020. Néanmoins, ce chiffre reste légèrement en deçà de l’augmentation en 2018, qui était de 259. 2021 reste tout de même la deuxième année en termes de créations depuis que nous avons des données sur les CVC. 


Une expansion rapide, ainsi que des acteurs diversifiés


Serge Tanjga, Senior Vice President chez MongoDB, remarque que, d’un point de vue technologique, les entreprises tech plus matures “mettent en place des équipes CVC car ils ont des capitaux en surplus à allouer, et parce qu'être un acteur VC aidera le positionnement de leur marque”, tandis que les entreprises tech plus jeunes “ ont tendance à lancer leur CVC pour attirer des startups qui puissent aider à aider à développer leurs produits, pour financer leurs clients existants ou supercharge des partenariats go-to-market”. Quand on analyse combien de CVCs sont mis en place, il est donc important de toujours se rappeler que ce secteur n’est pas un monolithe uniforme, mais au contraire ses acteurs ont une diversité d’objectifs. 


Il est difficile de déterminer quels types de CVC sont le plus représentés parmi le haut niveau de créations l’année dernière. Mais si on part du principe que la nouvelle “promotion” d’acteurs CVC est similaire à ses prédécesseurs, on peut prédire qu’un nombre important de fonds ont été lancés à la fois avec l’objectif “returns-first” et “strategy-first”. Si on s’interesse également aux montants investis par les CVC, on constate également une expansion constante ces dernières années, comme l’indique l’image ci-dessous, produite par CB Insights. 



Pour les startups, cela signifie que leurs options de financement sont non seulement plus larges, mais aussi que le segment “corporate” du marché est plus profond que jamais. Il est donc probable que les partenariats et investissements corporate-startup sont voués à continuer leur développement, et à concerner un segment d’entreprises de plus en plus large et varié.

Original Article:

The venture capital boom of 2021 was not built from merely traditional VC money. A host of other capital sources played a role in the global trend, from new methods of disbursing angel and seed capital to crossover funds pouring into late-stage startups. And amid all the noise, record-setting totals, and rapid-fire dealmaking, corporate venture investors were busy, investing gobs of parent-company cash into far-smaller concerns.

 

Corporate venture capital, or CVC for short, is the method by which wealthy businesses build their own investing arm. Traditionally, these efforts blend strategic goals (M&A, early access to technology, partnerships) and financial ones (returns). The exact mix varies by company and CVC effort, but it’s rare to find a corporate venture concern that has none of one or the other. This makes their investing an interesting blend of traditional venture and corporate opportunism.

CVCs were busy last year. New data from CB Insights makes it clear that 2021 was a colossal period for CVCs, an all-time record by some metrics and a near-record year by others. CVCs are in the news lately as well, thanks to MongoDB – a NoSQL company that went public in 2017 – putting together its own fund, an event that the technology world took note of. MongoDB joins recently public companies like Coinbase in employing corporate investor work before reaching mega-cap status. The trend goes further: We’ve even seen private companies launch their own CVCs, evidence at once of the lengthening period in which high-growth tech startups stay private and the sheer amount of capital available to pre-IPO companies.

 

Today, we’re exploring the data behind 2021’s CVC investing boom with commentary from Serge Tanjga, SVP Finance at MongoDB. Tomorrow, we’ll dive into the hows and whys of CVC in the current venture climate with commentary from a number of corporate investing players — and even one public company that is choosing to not build its own investing arm. Sounds good? Let’s get into the data.

 

How quickly is corporate venture capital investment accelerating?

There are two ways to track the growth of corporate venture capital: The pace at which new CVC concerns are set up, and the rate at which the larger CVC segment invests.

We’ll take them in order. It’s clear that more CVCs are being compiled in the current market than nearly ever before. Indeed, CB Insights data indicates that some 221 new CVCs were created in 2021, a huge 53% increase on 2020 data. However, the 2021 result was actually fractionally lower than the 259 built in 2018. That said, 2021 was the second-hottest year for which we have data when it came to new CVCs reaching the market.

 

Tanjga, discussing the CVC market from a technology perspective, said that more mature tech companies “tend to set up CVC arms because they have excess capital to deploy, or because being in the VC space will help with their brand positioning,” while younger technology companies “tend to start CVC efforts to attract startups to build on their product, to fund their existing customers or supercharge go-to-market partnerships.” So when we discuss just how many CVCs are being built, keep in mind that they are not a monolith when it comes to goals.

 

We can’t tease out a perfect split of CVC focus from the pace at which new funds were put to market last year. But if we presume that the new crop of corporate venture players is similar to those that came before it, it is safe to infer that a good number of returns-first and strategy-first CVCs were launched in 2021. For startups, that means that their set of capital funding options is not only broader than ever, but also that the corporate portion of the market is deeper than ever.

Why do we care?