Corporate VC is different from traditional VC in that it pursues strategic benefits not only financial returns, and as a growing space presents an opportunity to plug some of the funding gap in the African ecosystem, according to Martin Maina, corporate venture practice lead at Dream VC.
Speaking at the SA Innovation Summit in Cape Town last month, Maina said corporate VC is a potent space still in its infancy in Africa, with the potential to act as a major bridge between startups and a big list of firms looking to secure their way forward in African markets over the coming years.
“Corporate VC is different from traditional VC. Corporate VC doesn’t only pursue financial returns, but also pursues strategic returns,” Maina said.
“Whenever you meet a corporate VC, they want to know ‘how do you help to future proof my company’, not only ‘how do you make me money’.”
Among these strategic motivations are access to diversification and market expansion, while limiting the risk involved, he said.
As such, the pitch that startups need to be putting to corporate VCs says: ‘I’m going to de-risk the innovation for you, and give you access to the strategic benefit of that innovation’.
Corporate VC is still in its infancy in Africa, although with the funding gap still evident on the continent, Maina says the trend has a potentially big role to play in the ecosystem.
He says more and more corporate VC is coming up in Africa, especially in South Africa where the trend has been on the rise for the past decade or so, nonetheless it is a relatively untapped area with the potential for substantial growth.
Maina drew comparison with Japan and the US in particular, where corporate VC has been in existence for over 100 years, and in fact some of the biggest global corporate VCs operate as separate entities from the parent company because they’re doing so well. This, he says, points to the possible growth of the space, and how far Africa still has to explore this trend.
To corporates in Africa, he advises: “If you want to come in at the right time and at the right price, now is the time to do that.”
