Telecom Corporate Venture Capital On Pace for Highest Level in More than 10 Years

From NTT DoCoMo to Verizon, telecom firms around the world have formed corporate venture arms to invest strategically in startups. And the pace of those investments is intensifying in 2013. At the current run rate, telecom corporate venture funding and deal activity are set to hit their highest levels in over 10 years. (Note: A complete list of telecom corporate venture capital arms used in this analysis is given at the end of this research brief.)

Since the start of 2012, telecom corporate venture arms have participated in 145 deals totaling $1.64 billion. On a year-over-year (YoY) basis, 2012 saw a 34% increase in funding and a 27% jump in deals involving telecom venture arms. Corporate venture funding saw relatively less growth in the same period (7% funding growth and 23% deal growth) so relative to their corporate venture peers, telecom CVC activity is notable.

And as can be seen below, 2013’s deal tally already tops that of 2010. And funding with telecom CVC participation already matches 2011 year-end totals already as well.

While the telecom firms with CVC arms are geographically diverse, nearly half of all investments from telecom CVC arms since 2008 went to U.S.-based startups.  Germany captured 12% of telecom CVC investments, including over 25 deals with participation from Deutche Telekom’s T-Venture. France took 7% of deals in the period.

Within the U.S., almost 7 of 10 telecom CVC deals since 2008 took place in California which is not all that surprising since many telecom CVCs including DoCoMo Capital and Vodafone Ventures operate offices in Silicon Valley. New York and Massachusetts both saw just under 10% of deals with telecom CVC participation which lags the stats of venture capital overall.

Breaking down telecom CVC investment by stage, we see an increasing trend towards seed-stage deal activity over time. Just 5% of all telecom CVC deals were at the seed-stage between 2008 and 2010, but since 2011, 15% of all deals with participation from telecom CVC investors have occurred at the seed stage. Mid and late-stage deal share (Series C+) has stayed largely consistent between both time frames, dropping just 300 basis points.

Telecom corporate venture arms, not surprisingly, invest primarily in the mobile & telecom and internet sectors. 88% of telecom CVC deal share in 2013 YTD has gone into those sectors.

For reference, active telecom CVCs since 2008 included in this venture capital financing analysis are listed below:

• AT&T Ventures
• DoCoMo Capital
• NTT DoCoMo Ventures
• Innovacom
• Liberty Global Ventures
• KDDI Open Innovation Fund
• KDDI Mugen Labo
• Orange-Publicis Venture Fund
• STC Ventures
• T-Venture
• Optus Innov8
• SingTel Innov8
• SK Telecom Ventures
• Mona Lisa Capital
• SoftBank Ventures Korea
• Swisscom Ventures
• Telefonica Ventiures
• TeleVenture Management
• Telstra Applications and Ventures Group
• Telus Ventures
• Verizon Ventures

Data Integrity Note: Data featured in this analysis only looked at investments by telecom corporate venture arms, and not minority investments made by telecom corporations themselves. Both corporate venture and corporate minority investments are available as part of CB Insights venture capital database.