New Entrants To The Silicon Valley Venture Capital Ecosystem
Eric Buatois, General Partner at BGV shares his perspective on the influx of capital from International Limited Partners to Silicon Valley. The early stage venture capital industry has been enjoying some very healthy returns over the past several years. Limited partners were primarily large financial institutions such as endowment, pension funds, insurance companies in the USA Europe and China. Many large technology corporations have also set up corporate venture funds and today corporate venture capital represents 1/3 of all venture capital deployed in Silicon Valley – this trend has been driven by the desire to get access to new technologies and products. . Large corporations in every industry want to have access to innovative start ups to understand and experiment with new business models and or new forms of customer engagement. The strategic intention is to identify the new “Ubers” of their industry before it is too late. We are now entering the phase of the digital transformation of the enterprise after the digitalization of the consumer experience. The creation of Internet consumer leaders has been largely a regional phenomenon. (I.e. Aliabad in China, Amazon,, E bay in USA) Limited partners willing to participate in the build up of these new companies were also investing at a regional level. In contrast, the digital transformation of the enterprise is developing on a global level. Investors willing to participate in the companies building the future of the enterprise have to invest in Silicon Valley. The venture capital funds with an enterprise IT focus such as Benhamou Global Ventures can not only invest in companies born in Silicon Valley but also in companies built in Europe, India and Israel, and help them set up their US operations as well as connect them to the Silicon Valley industry eco-system. Large corporations based outside Silicon Valley, Limited Partners with a limited exposure to venture capital in the enterprise space, large government funds willing to support the set up of bridges between Silicon Valley and their own country are all seeking capital allocation from Silicon Valley based venture capital firms. They are not only aiming for top quartile returns but also for several key strategic benefits such as:
- Corporations seek to gain privileged access to innovative business models and technologies.
- Government funds are seeking access to new technologies and innovative companies to either complement their national industry or create more jobs at home
- Talented UK entrepreneurs will be concerned about their future mobility across Europe. The free movement of workers across the EEU will not be guaranteed. Foreign engineers and entrepreneurs living in UK will be worried about their future work permits and visas.
- Following the Brexit referendum, the demand of Irish nationality by UK citizens has increased significantly since Ireland being part of EEU can guarantee full mobility across Europe to its citizens.