Mexico CIty — 2022 was a record year for corporate VC-led deals in the U.S., and the trend could continue into 2023, especially after the banking crisis that triggered the collapse of Silicon Valley Bank (SVB), known as the startup bank because of its risk tolerance.
An analysis by PitchBook, a financial data firm, notes that there were 634 rounds led by corporate venture capital for some $22.4 billion in 2022, significantly higher than the previous record of $17.6 billion in 596 deals in 2021.
Corporate VC is the venture capital that comes from large companies. It is seen as an investment alternative to venture capital where investors can add their experience and knowledge to the startups. Meanwhile, entrepreneurs find a consultancy and management to consolidate their business.
“Considering that there were more deals led by corporate venture capital in 2022 than in the period between 2002 and 2009, it is clear that these investors are becoming increasingly active in their pursuit of venture opportunities,” said Vincent Harrison, VC analyst at PitchBook in a report.
In the U.S., more than 2,070 Corporate Venture Capital (CVCs) invested in U.S.-based startups in 2022, nearly four times the number seen just a decade ago, says PitchBook.
“These all-time record figures illustrate not only a growing number of active CVC investors within the venture ecosystem, but also a growing willingness and desire on the part of startups to take on CVC capital,” Harrison added.
Corporate Venture Capital in Mexico and beyond
In Mexico, some companies like Femsa (FEMSAUBD), Cemex (CEMEXCPO, CX) and Coppel have invested in startups in different industries and could become a stronger investment vehicle in Latin America in the face of the banking crisis, according to PitchBook’s analysis.
Femsa Ventures was the sixth largest startup investor in Mexico in 2022, according to Transactional Track Record (TTR) data, just behind Tiger Global Management, Clocktower Technology Ventures, Dila Capital, Wollef and Y Combinator.
The beverage conglomerate’s corporate VC invested $86.72 million in eight deals in Mexico, and in Peru it participated in the round of Sugo Company, a climate technology startup, where it raised $5.5 million.
Cemex’s venture capital arm was also very active last year. Cemex Ventures launched its corporate venture capital fund in 2018, investing in more than 20 projects such as PartRunner, a logistics solution for large and heavy materials, and British green hydrogen startup HiiROC.
Coppel Ventures, the Mexican retailer’s venture capital fund, founded in 2022, participated as one of the leading investors —with Axial Capital, Besant Capital and ENEA, in the $30 million Series B of Minu, a benefits company for workers. This was the largest venture capital transaction for a startup in February 2023.
In Brazil, the country where most startups emerge in Latin America, about 80% of executives said they intend to make at least one investment in startups still in the first half of this year, according to a survey by Brazilian business consultancy ACE Cortex.
“This shows how corporate venture capital and mergers and acquisitions have consolidated in the national market and will soon become the flagship of innovation in large companies,” said Luís Gustavo Lima, partner and CEO of ACE Cortex in a statement.
As a founder, having a corporate VC investor at your equity mix can be beneficial for several reasons: gaining access to a credible brand, leveraging the parent company’s technology or expertise to engage customers, or gaining access to new markets through a company’s network, PitchBook’s Harrison explained.