E635 | EUCVC Summit 2025: Francesco Di Lorenzo, Copenhagen Business School: Nordic CVC Insights

0:00The Nordics punch above their weight in tech and corporate venture capital is no exception. Francesco Di Lorenzo takes us through the latest data and trends on how the region's CVCs are evolving. From Sweden to Denmark, we'll see what's working, where challenges remain, and why Nordic corporates are some of the best partners in Europe's venture scene.

0:24All right, so last but not the least, I guess. But so my role here is that actually to give a summary reflection. But the more I attended the morning, the more I thought, I'm not going to live with that. And the reason why is because I learned a lot this morning. So pre-prepared slides to give you a summary of the day, actually, was impossible. So I also took some few notes, and I'm going to share some insights that I thought is important to keep as point of reflections of a beautiful event as such, a really impressive event, as well as some notes that I talk on the way, okay, to somehow opening more questions than answers, okay?

1:05So first of all, we talked a lot about CVC. It's called EUVCVC. But CVC just may be the most important at the moment, but just one of the tools that corporates can use to deal with startups, right? Collaborate, interact, tend to grow, okay? So if you look at recent reports, it's actually is very clear that if you look at the left panel, there's a lot of possibilities, CVC incubator, venture clienting, and on the right hand side of the panel on the left, there are the corporate objectives. You cannot really see a pattern for any of this. So corporate seems to be on the one hand confused, one could say, which tool to use for which results to achieve.

1:48On the other hand, in fact, maybe just like a curiosity to explore the boundaries of these different strategies that I can actually implement. And the question could be, are they mutually exclusive? Do you think in a compartmental way and think about those as separated or there's a need for an integration, right? So if you look at on the right panel, one view could be using the time, right? So over the time of the corporate innovation strategy, different tool can be operated, right? But it's actually true that the previous one become obsolete, right? Make me doing an innovation program for startup as a accelerator or incubator might be good in early stage, maybe investment come later but how about combining a small investment with that at incubation right from the very beginning so these are all questions that uh looking even descriptively as this panel you know we still have open on the table okay um we talk about uh cvc okay i have a few slides about this i'm not gonna go through that because i think some colleagues have been doing much better job in showing you ready trends they become fairly much repetitive but this is what we call the cvc effect Okay, so it's also been mentioned a little while ago, right?

2:57So the corporate comes in. I think actually the last panel mentioned that. So independent venture capital firms knows a lot about investing, but when you come to the deep technology, they might fall a little bit short, right? So what we've served in the trend in the VC industry is that there is a lot of hiring happening from private sector and corporate into VC firms to exactly bring their expertise, right? On the other way around, this trend does not compensate for all the need of technical knowledge. So the CVC come in and say, hey, I might actually give you$1 as opposed to the$8 that on average global in the last 30 years VC have deployed in a startup.

3:32But they're going to bring you all this what we call the asset and resources. So pilot possibilities or proof of concept or distribution channel. All those things that a VC can actually not provide. So one of the question that I have here is this hybrid model that I tried to to combine kind of a VC company running the VC job with a kind of a corporate unit that actually focuses only on what is actually needed inside a solution, the right combination, right? So this we don't know, right? At the moment we look at this phenomenon as the CPC company, there's a VC, and they kind of collaborate in a cap table.

4:07But maybe that collaboration can be built in planning investment early on by the corporate effect, right? So a few examples doing this, even in this room, that's fundamentally how to bring together money and the assets. Okay. So we saw these slides before, right? Corporate actually very important. Second ranked investor globally always, okay? In the last 30 years, big interesting going up in the volume of investment. That's very fascinating. Okay. And if you look at from an industry cross sections in the fundamental years, you can see that energy drives a lot of this investment. While most of the industry has been contracting, actually energy still keep ups.

4:47And it's something that we're gonna see also in the Nordics when we take a snapshot of our region. How do we measure, right? So this morning people talk about measurements, so is this a successful CBC? It's not, right? So the 3.7 years of duration of a unit might be very well explained because it's very hard to translate into results all those activities in Ventrem, right? So this is not surprising because if you map all the possible metrics used by corporate, but even startup to say was actually a good deal to make a collaboration with or any sort of investment deal with a corporate, it's very confusing.

5:25And if you look at the plus and minus, this is a summary of the last 20 years research about what did work and what is not, and mostly on US data, because I agree with some of the previous panelists saying that this game is fairly majorly placed in the US, in North America. we have a little bit of confusion. So once again, it's not surprising, right, that TMT, so top leaders in a corporate, at some point they say, well, we are on the minus swing, so we're gonna terminate the unit. If you're on the plus swing, then we're gonna keep the unit, right? So, but selling a formula for success, it might not be just as easy as inventing startup, and that is going to work, okay?

6:01So then they open the question about what are the boundary conditions, okay? So why and when does it work, okay? So if I have to summarize again for you, is a big, if you wish, message. It works mostly, okay, when the startup and the corporate, they build some sort of collaborative device beyond the investment, okay? For example, in my own research, we see that if you actually take engineers and send from the corporate even temporaneously, not even kind of a transfer as an employment, right? Just for six months or even one year, engineer from the corporate to develop the product with the startup is much more impactful than investing in additional millions of euros in the startup okay so this is for example one device or another one could be board members board members can be kind of a double-edged words but actually most more board members have been proven to open up a lot of commercial possibilities okay so do money uh uh uh become smart when they are deployed the answer is no to be smart money from corporate we have to still work the organizational elements of it meaning exchanging engineers exchanging marketing expert giving possibility to a startup to access to the real resources okay not just the money so for you corporate guys when you think about doing that think about how to beg for the money from the CFO but also think also about the operations who can actually support you to make the investment successful okay because that's what tweak actually the positive results who is now the new boy in the hood you can say venture clienting I I haven't really heard, I've heard about in the breaks, but I haven't really heard the 204s, the focus was CVC.

7:37But this is actually the new upcoming strategy for dealing with startup as a corporate. So instead of investing money, what you can do, you can actually go and say, hey, I became a client of yours, right? I'll give you a contract, right? That should stabilize in somehow evaluation, should give a signal to the VC market, right? And that seems to be good. And the good news for corporate is that you don't have to put a penny on the table, right? That could be enough to make a commercial contract. However, if you actually think a little bit more deeply about this, venture clienting could be as critical and as risky as CBC.

8:11In fact, you might not put much capex, but there's a lot of opex and operations that get involved in venture clienting. So corporate must be collaborating to develop the solution that they want to develop for, from the startup. That takes operational times, meaning a lot of governance to put in place. that costs money, costs time, is risky, right? Then, who is actually creating the solution? Is it BU creating the solution or is it top-down? Some units out there that go and say, oh, wow, that could be very useful to my colleague developing the pipe of water pipes, right? But do they really need that?

8:46Do they tell you exactly what they need? So again, there is actually quite a better risk than rather going investing a startup and bringing it to the BU and say, well, but I don't need that, right? So you still don't need that anyway, even if you treat as a client, right? And finally, which startup will end up having a heavy client on their commercial agreement list while you're still looking for financing? And maybe corporate later on might actually be disregarded. I can tell you from my own data, actually in the Nordics, right? That the probability of having a commercial partner while you get an heavy, serious A, or later corporate investor, it's actually decreased over time.

9:25And the more the power given to this corporate, in fact, it makes not only less likely than a new investor comes in, but also the current investor with less equity to go out. So this means that in somehow corporate might actually not be necessarily the best client early on. Okay. So long story short here to say, for those of us that are thinking of venture clienting as a cheaper way to do venturing as opposed to CVC, be careful because think well about the risk that I can imply as well. Okay. So what's next? Okay. So this is what I've been thinking about it. and I'm gonna give you a little bit of preview.

9:58This is something that is dear to some of the people in the room already mentioned before, right? And this is the point, okay? So 3.7 years, 40 years, the duration of a CVC unit, right, why, right? This is correlate probably 0.99 with the duration of a CEO in the office, right? So when CEO probably get substituted, a unit of CVC also get either terminated or reshuffled in the organization, right? So what do we need to actually make this objective of innovation lasting and be attained right probably moving from skin into the game from board into the game so the board a very top-down commitment from the board has to happen to protect the unit right and the investment in startups or the collaboration right across time okay because any strategic change cannot terminate activities this might actually take three four five years okay to show results okay what's next intermediaries okay so I love the point about the network of CVC does it work actually from data very freshly cooked I can telling you that what happened there is that corporate only go with other corporates when it's not really fundamental for the core business right so CVC is still a strategic tool for compete and not too much to collaborate So keep this in mind when we think also about all these events.

11:17Okay? How and what are we networking on? And that there are plenty of elements that we haven't explored yet. How a venture gets in steps, okay? So in a way is different than a CFO is a promoter of it, or the R &D director or the CEO. That will change a lot. We know very little about it. And among other things, I'm telling you, timing is very important. Getting a CBC early on might make a startup better for innovation but very not so good for ipo evaluation and actually it's the other opposite around for later stage however if getting later stage boards which is very normal will decrease revenue of a startup on average right and revert back to r d investment why of course the corporate does not come for your peanuts as revenues as a venture but comes to learn from the venture so so there is a lot of friction into that right and the last thing that i want to mention here very interestingly so is multiple CVC, right?

12:10Multiple CVC happen mostly sequentially as the panel on the right suggests you. This means that there's gonna be some power dynamics, okay, in the cup table that has to be taken into account, okay? So this is something emerging and this is happened very much into the Nordics. I want to give you some preview. We did a report and we're still working, they send it all in Norway and now we send it also in Finland and Sweden to get the picture, okay? So what we can see here is lots of corporate have a unit, Lots of corporate do it for strategic reason and innovation Specialized technology protest solution is what they look for when investing in startup.

12:44Okay in the end the idea is to Co-invest for 43 % of the cases which is kind of fascinating. Okay And many of them they take a board position and what they believe they give to the startup is the idea That the scalability is very important for them. So the startup must be scalable is very very important. Okay Okay, small portfolios and early stage mostly. Okay, that's my reflect the idea that there's not many big tickets to pay. And eventually what's the problem that the unit encounter in the dealing with the corporate, the startup and the unit is bureaucracy from the parent, right? So lots of units found that one as a primary limitation to carry it out much more investment, much more collaboration.

13:26Okay, so this speaks to me to a very clear message, which is we need to change the culture in the board room. Okay, so the boardrooms and the TMT must change the view of what venturing is, which is an investment in entrepreneurial mindset and not only acquiring a short term solution that might make the return investment or in general, it'd be that better. Okay. And these are some comparison with the primary preliminary results that we have on the Norway and Denmark together again, hopefully soon giving you more about the other two states. A couple of points here that people mentioned AI, Everybody mentioned about AI, want to mention about AI.

14:05Most of the corporate we study in the last 20 years, SP500, most of the corporate, the more invest in a startup in AI, the less invest internally. So then it's not surprising, right? Invest in internal AI solution. This means that fundamentally, corporate are externalizing the understanding of AI, which could create a kind of friction when it comes to having this very deep tech startup in the house, and then we don't know how to leverage them. Okay? This is kind of very interesting that I want to leave here and lots more data. I'm here available. Thank you very much for today and thank you for the great event.