# Private Capital at LBS

Data: 11-01-2025 21:42:47

## Lista de Vídeos

1. [Corporate Venture Capital Practices with Ilya A. Strebulaev](https://www.youtube.com/watch?v=XFFxAE87Qh8)
2. [Private Capital Symposium 2022: In conversation with Jonathan Lavine](https://www.youtube.com/watch?v=IwW2MHYn-Gk)
3. [Corporate Venture Capital: In conversation with Ilya A Strebulaev](https://www.youtube.com/watch?v=D42his0NfmI)
4. [Venture Capital Investing: In conversation with Ramana Nanda](https://www.youtube.com/watch?v=VB54-FM_KKg)
5. [Exploring GenAI's Impact on Industry Transformation and Private Equity | LBS Experts Discuss](https://www.youtube.com/watch?v=pXbPVDg759Y)

## Transcrições

### Corporate Venture Capital Practices with Ilya A. Strebulaev
URL: https://www.youtube.com/watch?v=XFFxAE87Qh8

Idioma: en

foreign
[Music]
Capital industry for Stanford we do
study
corporate bench capital and we started
in depth almost 200 Corporate Advantage
Capital initiatives corporate Advantage
Capital groups
and that's what I've learned broadly one
is that unlike institutional venge
Capital that kind of all similar to each
other
corporate bench Capital groups vary
dramatically they're designed very very
differently
and the second lesson
or other second prediction
that is coming out of my research is
that I'm going to predict that most of
those corporate bench Capital groups
unlike Salesforce are not going to be
successful
and I will tell you why in a second why
I'm not that optimistic about most of
them but it's really all about the way
they are designed
this is my favorite definition of CVC
success which is a little bit less
academic but very practical I think
corporate bench Capital unit is
successful if it survives the change of
Two Chief Executive officers
and most cvcs are not very successful on
that dimension
I mentioned the design when we talk
about the design it's in fact very
difficult to study
because we can look at their
presentations we can study the
Investments
however the critical point because most
of them are relatively young is how the
decisions are made within the CVC
how the team within the CBC are related
to the Mothership to the main corporate
parent
what kind of Freedom Services have what
are the responsibilities are and of
course what the compensation practices
and the retention practices on the
corporate venture capital
what we did is we interviewed with my
team
more than 220 Corporate venge Capital uh
units around the world I'll go here I
will show you some results
that is based on almost every single
corporate bench Capital unit in the
United States from S P 500 companies so
effectively almost every single CBC
group for large publicly traded American
companies
just a couple of Statistics to start
with first of all where the CBC groups
are located
uh this kind of orangey color is the
location of CVC and that is the location
of their parents which is s p 500. and
did you see that most CVC groups are
located in California
the first result we find is that when we
look at various measures of metrics of
success for those CBC groups that
already exist for at least five years
then the farther you're located the
farther away you're located from your
parent the more successful you are
so that is one reason why I think
located in California especially if you
are not in California
is a good strategy so for those of you
who are thinking about about opening
your CVC or redesigning your CVC unit
one suggestion I have is to think about
location not necessarily in Silicon
Valley but somewhere further away from
the headquarters
another important point is the Strategic
objective there is three possible
strategic objectives for corporate venge
Capital unit
one is defense which is supporting
existing businesses the truth I think
about many cbcs
is that especially in more traditional
Industries companies are worried
companies are worried about large
competitors coming in such as for
example Amazon or others into their
industry and disrupting the industry
disrupting their business model
and defense is one very important
characteristic
for example more than 25 percent of CBC
leaders told me that one of their major
goals is to provide information from the
ground early on to the woods and
Leadership of their companies so that is
one objective another objective is of
what I call offense which is developing
new business lines either in the
adjacent business
to the business model to the vertical
where those companies allocated right
now all completely different lines
and as you see that both defense and
offense are quite popular strategies
there is a third strategy which is
financial returns
now they add to more than 100 because
some of them pursue several strategies
at the same time
uh whether you pursue offense or defense
might be a good design overall that
depends on the rest of the structure of
the CVC
but one message I have based on all this
research for the CVC and for their
leaders and for those who Design
Services is try not to concentrate only
on financial returns
and we have that every fourth CBC at
least an hour sample
told us that we have the only goal of
financial returns which is no strategic
returns only financial that is not a
good strategy typically and that is
because
most Services have no way to compete
with institutional venture capital
and that is really I think
increase the probability that you will
not survive the change of two CEOs
this I find very interesting because we
looked at
to whom the CBC head reports
within their large organization
and one conclusion here is that there is
no natural harm for CVC in many
organizations
it very much depends on the ad hoc
nature of corporate bench capital
in a quarter of cases
cbc's report to the CEO directly
and as you see there's other categories
some of this other means the chairman of
the board of directors
however
we have 14 Chief finance officer
which I think might not be overall a
good idea
because CBC is a risk loving by its
definition and C4 is risk-averse
what is really interesting is that r d
CIO means Chief Innovation officer here
um r d might not be a good strategy as
well
and the reason is that there is
inevitably some innate conflicts between
the internal Innovation efforts and
external Innovation Innovation efforts
a friend of mine who for 25 years had
been the head of a major corporate
Venture Capital group of a major
of a major American company told me that
them her her biggest problem in all
those he has been then whenever she
brings a startup to the company
the company's Intel r d says well we can
we can do it
and we can do it much better and
moreover they're absolutely right they
can do it they can do it much better
they just will not do it
okay
um and so so in our research when we
look at various metrics
CFO and RNG might not be the best the
best idea but the CEO or chairman of the
board the head of strategy seems to be a
better idea
now Nova mentioned something that I
think by far is the most important is
how the decision-making process of
corporate Venture is is organized
and this is what we found out
is that in most cvcs with some notable
exceptions
there are two-step deal approval process
so let me describe very briefly how this
two-step deal approval process works
in step one there is the internal
corporate venge Capital team
whereas they have to make a decision on
every single deal
that reaches their pipeline reaches the
deal funnel
and several years ago my my colleagues
and I made a major study of
institutional Venture capitalists by
serving more than a thousand ivcs
and if you look and compare that study
with the first step of the CVC study in
fact that would not be that different
so this shows how the decisions are made
for example about a third of services
have to reach a unanimous decision
meaning that all the at least senior
Partners at the CVC group have to be
enthusiastic about investing in a
particular deal okay
only in four four percent of cases the
situation is very different than in the
IVC so this is in fact not that
dissimilar however the story is only
starting here for most services
they then have to go to step two which
is investment committee IC
the investment committee is outside the
corporate Venture Capital unit most of
the time and about 93 percent of cases
and uh the investment committee consists
of people who are not in CBC in fact in
the majority of cases the head of the
corporate bench Capital unit is not a
member of the investment committee
they provide information but they don't
make a decision well who is a member of
the committee well it could be the CEO
of the company it could be the chief
finance officer the heads of the
business units the chief of strategy
Chief finance officer and general
Council
and those are the people that have to
approve
sometimes every single deal
sometimes that is the same committee
that has to approve a one billion dollar
Acquisitions and a two million dollar
startup Investments
and sometimes they require unanimous
infection half of the case they require
unanimous approval now very often
the services will tell me that
well we have no problem with investment
committee because they never turned us
down
now there's a reason why they never
turned us down because of course you
socialize the deal and you bring only
the deals
then the investment committee is likely
to approve
and if one thing can be learned about
venge capital is that when everybody
agrees
in the venge Capital that might not be
the best idea to invest
because the most promising startups
especially at an early stage are those
where there is some craziness involved
and therefore it's unclear whether it's
going to be very successful or less
successful
the investment committee also works not
in favor of CBC because it slows down
the speed right now the speed right now
it might be a little bit of a less of a
problem
because the dental funnel times
increased dramatically because of the
cooling in at least Silicon Valley but
in fact for the past five or six years
there's been a major problem
big if you if you lose between two weeks
and sometimes up to two or three months
on a deal that means that you're likely
to lose the most successful deals
as a result of that
in most cases that we looked at the
two-step structure is not optimal you
lose time you lose the best deals you
also likely lose those deals that the
internal CVC team is very excited about
but in fact the co-investors for example
top institutional venge Capital firms
would like that specific corporate bench
Capital to invest in because of
potential signages
but the investment committee will not
approve or even will not see the deal
because the internal CBC team doesn't
think it's worthwhile to bring that
startup to the attention of the IC
so I work quite a bit with top global
companies to try to help them to design
corporate bench Capital initiatives and
this is one of the major issues that we
discuss how to streamline the investment
committee and here is one piece of
advice that I think works almost for
every single corporate bench capital
the parent
should not give internal CBC team
complete freedom
however there's a big difference between
individual company decisions
and portfolio decisions
so one piece of advice is to think about
is to give a lot of freedom with respect
to individual decisions up to relatively
High Financial level
but at the same time the parent should
decide overall on the portfolio location
for example let me give an example of a
company that I worked with recently
if you think about of a pyramid of types
of Investments That CVC can make they're
going to belong to three broadly defined
areas one is core this is the core what
company is doing another one is adjacent
or high quality change which is not
really what the company is doing but
something that is directly helping the
company's core
and third is is disrupt something that
potentially can completely disrupt the
business model of the company
so the parent can insist on the overall
portfolio allocation of the CVC for
example 60 core 30 change and 10 disrupt
and then evaluate the financial and
strategic performance of the portfolio
of companies rather than every single
individual company
I'll skip this slide which is uh which
is uh where uh Salesforce Ventures I
think is leading but it's it's
consistent with the industry practice
that most cvcs do not acquire their
portfolio companies
when I talk to Silicon Valley
entrepreneurs and I teach Venture
Capital class at Stanford and all my MBA
students would like to become founders
of unicorns and indeed about 400 of my
students raised bench Capital backed
money and I'm helping them to to raise
and negotiate uh with Venture
capitalists both ivcs and cvcs all of
these entrepreneurs
traditionally worried about taking money
from cvcs because they perceive CVC as a
cheap way at the back doorway for those
companies to acquire those their
startups at a very early stage when they
are disadvantaged so there are the
reality is very different in half of the
cases CBC is never acquired a single
portfolio companies and only less than
10 percent of uh cases CVC is acquiring
a lot of portfolio companies most of
those are in healthcare and biotech so
biotech is a somewhat different category
from everything else
another interesting point is if we
compare the IVC and CVC with respect to
how they interact with portfolio
companies
and here there are a number of cvcs
including Salesforce ventures in my
opinion that lead the pack which is
they're really close to institutional
Venture Capital let's look
uh at some interesting statistics I
think so so this is how often lead
Partners interact with the executives of
portfolio companies and when I say
interact it is very
in-depth interaction
um outside covet would be visiting
offices inside code and now would be
sitting on Zoom trying to helping to
hire
for example advising on fundraising and
so on and so forth
so Blues here is the CBC and green is
institutional venge capitalist and what
we find for the institutional Venture
capitalists a third of lead Partners
interact with their startups multiple
times a week
that is very different I'm sure that
many of you here are familiar with how
board members of public companies work
well those people are going to be board
members of startups and I don't think
board members are of public companies
either in the US or in the UK will
interact with the CEO of a company
multiple times a week
and another third will interact at least
once a week
and another quarter will interact
several times a month so in total 90
percent of institutional venge
capitalists
are very Hands-On interaction
that contrasts with corporate bench
Catalyst they'll take very different
approach
um some of them
are very active but most of them are not
and this is statistics confirmed with a
lot of unilateral evidence when I talk
for example to my former students who
raise money both from IVC and from CBC
the CBC is typically even if they're
full board members
and definitely they are board observers
taking a back seat
and I think for most cvcs it is not a
good strategy overall
you have to be active
in order to help the company
academic research showed that there's
been very substantial there is very
substantial component of VC value add
which means that of an adventure
capitalists engage with the company the
value the value goes up
and let me finish by showing you a
couple of slides and then I'm done Gary
we compared the human capital of ivcs
and cvcs
for every corporate bench Capital firm
in our sample we identified every single
investment manager in uh in that CBC
Investment Management meaning the person
who is participating in investment
decision making process and then we
match those cvcs with ivcs using a
certain matching procedure and we
identified every single partner in the
institutional venge Capital firms so
what I'm going to show you is some
characteristics of people who work
at cbc's and matched ivcs
first of all there's a larger turnover
in corporate bench capital and that is
related to a lot of things including
compensation
on average CBC is a practitioners spends
spent about six years in cvcs as opposed
to eight years in the Matched
institutional Venture Capital funds
one of the biggest differences is in the
middle which is the entrepreneurial
experience
overall the corporate bench Capital
practitioners have way less
entrepreneurial experience and that
might be also even though it's difficult
to show this really statistically this
might be also one reason why many
services are less successful in helping
their portfolio companies
many cbcs also do have IVC experience
this is really interesting because
it turns out that not only corporate
Venture capitalists move to avenge
Capital firms but also institutional
bench cap is quite often moved to
corporate bench Capital firms
because we are here at the London
Business School at the business school
we need to mention the MBA degree about
45 of interest rate Venture capitals
have MBA degree and more than 60 percent
of corporate Venture capitals have an
MBA degree
in fact in a number of services we
interviewed every single person has an
MBA degree which was industrial duration
okay
and the final final slide I have most
lies on compensation either if there are
questions because we started the
compensation practice in CVC in quite
detail and compare them to IVC well the
IVC compensation is really very easy
there's the Management Field that pays
the salaries and there's the carry which
is profit sharing
the compensation of services cannot be
more different in one line I think cbcs
are broadly compensated with some
notable exceptions as corporate
employees
which means that they um most of them
have no incentive pay whatsoever
um a lot of them have bonuses but those
bonuses are not related to the
performance to the financial or
strategic performance of CBC
and only in about 20 percent of cases
CBC compensation is in some way similar
to the performance of institutional
venture capital and when I say carried
interest it doesn't mean the same carry
interest the same profit sharing
arrangements as in the institutional
venture capital or private Equity firms
it really should be in the quotation
marks but this is kind of some some kind
of synthetic profit sharing up to up to
certain level
and when we split
um the 20 of the services that do have
care interest and the 80 that do not we
see clear that for example the turnover
in corporate bench Capital units that do
not have any profit sharing Provisions
is much higher so people are living
because of the because as one of the CVC
heads told me
it's a great picture that I produced six
unicorns for my company
but I didn't benefit at all
and then three months later we checked
again the website and out of six
managers three left
so that's specifically a lot of evidence
um Let me let me stop let me stop here
just a very just very briefly we in fact
when we introduce those corporate bench
Capital units
we arranged the responses in more than a
dozen buckets and the paper on the large
American companies has been published if
you're interested in to learn more and
we're preparing another report on now
more than 220 Corporate bench Capital
units thank you
[Applause]

---

### Private Capital Symposium 2022: In conversation with Jonathan Lavine
URL: https://www.youtube.com/watch?v=IwW2MHYn-Gk

Idioma: en

[Music]
our first speaker today is
mr jonathan lavine
jonathan is
the co-managing partner of bain capital
he is also the chief investment officer
of their credit business
he joined bain in 1993
and uh since and he is actually the
founder of the credit side of the
business within bain
uh jonathan is
has a lot of interest but he also has a
lot of
interest in supporting educational
activities and he's on the
board of trustees of columbia university
colombia is actually a partner school of
london business school we have a joint
program together
and he's also
involved in other non-profit activities
uh around the world
maybe
before we we get started i'll say just a
couple of words about being capital
being capital i don't think it needs an
introduction really but at the moment
bain is managing 160 billion uh worth of
capital in a lot of strategies close to
12 strategy i i counted and 21 offices
globally
uh 1300 plus employees working for bain
capital
and the portfolio companies of bain
capital i learned
higher employ 550 000 people so very
significant operation that uh jonathan
is is responsible for and jonathan will
be
speaking to us about
a couple of very important issues and
maybe we can get started jonathan on
that
i wanted to ask about
your perspective just to get started
about your perspective on
being publicly listed as an asset
manager over the last year i think i
counted about seven
large asset managers in the alternative
space
listed or planning to be listed so it's
it's a trend and i know that you know
you know that a lot of your very large
peers are already publicly listed ben is
not listed yet so we wanted to
understand a little bit your perspective
on that
in an industry that has become
successful by investing in
private companies
but paradoxically is fascinated about
being publicly listed
so what is your view on that and uh if
you see any potential conflicts or any
maybe misalignment with with your lps if
you are to be listed sure and first i i
just want to thank you for having me i
think
particularly in a post-covered world
these kinds of convenings are incredibly
important this is how people make
contact and zoom has proven to be an
amazing tool to add to our toolbox but
it is it is a tool it is not an end and
i think
it's great everyone is here today
as it relates to publicly listing
asset managers
as with
many things there is no single right
answer
um
other than
you should do it for particular reasons
you should know why you're doing it you
should not do it because everybody else
is who's done it generally
what we've seen in our
peers that have gone public is they had
an individual founder they needed to
monetize
they did not have internal capital to
execute expansion strategies that they
thought
were
that they thought were uh important or
they were trying to access some sort of
balance sheet capital uh bain capital
has the good fortune of almost over our
40 years that we have devised the model
to be a successful um self-perpetuating
partnership we've been able to grow to
uh
we've been able to grow to
you know 12 business units 21 offices
160 billion dollars without any outside
capital other than the partners capital
and we very much have a culture that is
right for us
which is that we invest alongside our
investors
we are principal investors and
you know if you think about what people
would do with public stock we take that
value ourselves and put it into our
funds alongside our investors
you know there's a never say never but
we have no plans
to to be public we think that we can
accomplish our business strategies
the way we have
and we would always ask ourselves one
question which is
is our being private in some way a
negative for our investors are there
things we can't do in our funds as a
private partnership that we could do as
a public partnership and so far we think
just the opposite is true that being
truly private being able to execute on
our strategies
being able to
have the single focus of our business
model is a partnership among our
partners and with our limited partners
is the right strategy for us and
you know obviously there's been very
very successful stories the other way
and that's how markets are made yeah
yeah and you think by staying private
you you'd achieve a better alignment
potentially with your investors or or is
it you know i won't do a a a comparative
i think that we achieve a unique
alignment
we are the largest investors in our
funds um
and uh i think that it perpetuates a
partnership culture
where all we worry about is the
investments in the funds there's nobody
at bain capital who was paid for aum or
eps
we all are focused on returns and
delivering for our partners and
as i said that works for us
there's obviously other strategies and
public strategies that have worked
incredibly well and it's probably good
for the limited partner base that they
have a wider
array of heterogeneous choices of
different types of firms with different
styles and strategies yeah i mean one of
the main reasons that people code for
going public is that they can raise
capital on their balance sheet
and they can use that capital to seed
new strategies
and you are already in 12 strategies and
multiple geographies
what do you think is the next frontier
in terms of investing you know what is
coming next is it maybe continuation
funds i don't know if the
audience is familiar with continuation
funds maybe maybe could quickly explain
that as well or
maybe accessing retail investors
is that
so
you have to so first of all a
continuation fund is when companies in a
private portfolio have hit a date where
either the fund is maturing or the funds
winding down or you would want to sell
it but you really think that it's got
good long-term characteristics
but maybe not quite as much as the
return as it was when it was a de novo
fully levered lbo
you create a new fund that your
investors can participate in and you
continue to own those um
so
there's a there's a lot to that question
so uh firstly our particular strategy is
uh
look at what we're doing and see if we
have fully um
uh fully developed it across our
geographies right you you know um
private equity credit and um public
equity
all started in the 80s and 90s in the
u.s then we expanded
across the uh across the globe while we
were also expanding into different types
of private capital venture tech up
social impact real estate a whole
life sciences there's i could go through
all all 12. 12
and on the capital market side as well
and then some of those are now looking
at geographic expansions because of the
partnership we have
we can work together and expand our
footprint as as appropriate there and
that may reveal itself in
asset classes
that um are particularly interesting we
have a
japan middle market business that grew
out of our japan um uh private equity
business which was more focused on on
large cap so you look at the business
that way and you ask yourself
where are we missing what we know how to
do and then are there obvious gaps a few
years ago
we saw
regular way private equity style real
estate as a as a gap we had
we have a very very large special
situations real estate business that uh
was uh started by elon avenue who's
sitting over there
but we recognized that filling in a u.s
more traditional private equity style
real estate business
and different than
some of our peers what we did is we
found an opportunity where a large
university endowment harvard um was
getting out of the direct investment
business we're both in boston and we
were able to work with them quietly as
partners and bring their whole team and
all those assets over to
um to bain capital and that's how we
started that business
in terms of continuation funds
i would say
there's a bigger question undeniably we
would all like to have longer term holds
that the business now has become vibrant
enough and um
different than when the private equity
business started or even the credit
business the companies are bigger
there's more market leaders there's um
you know lots of long-term
winners um and therefore i think that
can be accomplished
through continuation funds through
permanent capital um through structuring
funds that just in and of themselves
have longer you see some evergreen funds
developing um
and we at various points in time work
with our limited partners to to
explore all of those things
but we also want to make sure um
the way we do it um is because we think
it is sustainable and not just because
two other people did it um but i think
over the next five years or so
you will
see more broadly across our industry
people including ourselves working on
longer term solutions to own really
quality companies not for five years or
six years but for 10 or 15 years
yeah yeah and how do you view
private equities access to the retail
market
is this something that you are
considering and what would be the
pitfalls there
so
we do have some
retail is a lot of things we do have
some individual money our original fund
was a hundred percent high net worth
families uh our um credit funds um and
our public equity funds do have some we
either
sub advise or have some white label
mutual funds which we think are
appropriate for those assets
um and uh
we think that the democratization of
finance and access to returns
is always a positive thing that
providing people access to higher
returning product is a good thing as
long as they know what they're getting
they understand the loss risk and the
lock-up and that
retail investors are broadly not used to
investing in things that they can't sell
but
as we have at various points in time
access those markets if those criteria
are met we think it's a good thing um
but there are
reasons why there are disclosure rules
there are um uh you know qualified
investor qualifications and i think it
is
partially up to the regulators because
they will have more data across
everybody to really land on
the the appropriateness test or people
like us to come up with potentially
closed and tradable
um uh funds
um for high for high net worth um i
think the i mean for retail i do think
interestingly enough high net worth
ebbs and flows in the business
and they are that cohort of the market
particularly multi-family offices very
large family offices
are uniquely interested
in in this space now um and the interest
has has gone up as it's as it's been as
as our industries have shown the ability
to sustain returns through cycles um i
think
as we are doing more and more things
that provide access you know straight us
equity exposure maybe something that uh
you know high net worth families like
yes i get better returns in a private
equity fund but i could buy equities but
you know
access to indian infrastructure plays or
an australian airline or um
you know
pizza express here in london um you know
those are things where we can bring
to an individual investor global
exposures that they couldn't get
otherwise yeah yeah
i mean you manage a very large firm
and you've been in the industry for many
years for for our students what is in
your mind the definition of a successful
firm
and that's
by implication what is the definition of
a successful private equity individual
so
a successful firm first and foremost
needs to accomplish the
stated mission of the firm delivering
outstanding results for its um for its
investors because
you have to first and foremost do what
you say you're gonna do
and then you have to be true to the
values of your firm
you know we pride ourselves on the types
of partnership we make internally and
externally so that the culture is there
with ceos with communities with uh with
each other
we recognize that what we do challenges
conventional thinking so we are not that
i mean we're the largest firm that's not
public we don't always follow the path
that everybody else follows so you
really have to know that you have to
know what you're good at know how you
invest and stay true to it and not fall
prey to to the to the newest thing
um you know and as an individual
um
you have to have a certain level of um
intellectual curiosity you have to be
interested in the work
i always tell people if you go to the
investment industry just because it pays
well you're unlikely to be successful
because
very few people are really good at
something they don't like doing
so you have to make sure you find where
the intersection of your interest and
and your capabilities um
you have to remember to play the long
game
we live in a
in a in a world now where
you know my daughter
was an analyst at one of the banks and
she was shocked that her second day as
an analyst people already started
interviewing for their next jobs like
literally during training
um
and uh and and i don't to state the
obvious i don't think that's good um i
think that you should commit to to an
institution or to a job for some
appropriate level of time you have not
mastered it after 10 months
and you should never if you do make a
change
run from something you should always
make sure you're going to something that
you have consciously chosen to do
and then lastly
you yourself need to know
you know who you are what you're willing
to do what your strengths and weaknesses
are but also the types of investments
that you're proud to put your name on
and i mean proud in terms of
you know is it a company that i'd be
proud to have all my friends and family
know i'm involved with you'd be proud
that the work that is produced on it
whether or not it's a good or bad
company
is work you'd be proud to say this is my
best thinking
and
you'd be proud of the way you conducted
yourself respectfully towards
the people with whom you partner the
management teams the workers at the
company
and that you can always go home and say
whether it worked or not i did my best
and i conducted myself in a way that i
would be proud to talk about
yeah very good thank you hopefully that
will inspire some of our students here
in the audience
we will open it up for questions from
the audience by the way but before maybe
let me just throw one at you jonathan
and probably is the most common question
that you hear these days
how is uh how is inflation impacting you
think
the private equity industry and and
potentially bank capital
so
i think the first thing is very few of
us have invested in um inflationary
markets um in our lifetimes it is
something that people talk about in the
70s
and you know i i'm
i
vaguely you know remember the impacts on
my father i grew up in a sort of
manufacturing community and what
inflation did there but in general most
people have invested through a
non-inflationary market which means that
it is incumbent upon everybody
particularly the leaders of firms
at least i've invested through up
markets and down markets um you know
there's people who graduated
business school in 2009 and until 2022
2020 never saw a down market and then
that market was only down for like 90
days and so there's all sorts of bad
lessons that are out there vis-a-vis but
your experience can only be what your
experience is
so
firstly
you have to measure twice and cut once
because inflation is not a thing
it is the sum total of a lot of things
at any moment in time there is always
something that is inflationary
inflationary and something where you may
see prices go down deflationary you know
computer chips for the longest time only
went in one direction
um
you know energy
went up and down
what we are seeing now is everything's
going the same direction
and because everything's going the same
direction including wages uh
we are in a scenario where i think that
it is very hard to put your finger on
when and how this turns there's plenty
of
um fingers being pointed on how we got
here and why we got here but how people
flooded the markets with money in an
absolutely never seen before global
pandemic
you know i just find it really really
hard to be very critical of everybody
doing what they had you know doing what
they could to try to save markets that
could have in economies that could have
gone off the edge
so what do you do now so one is you make
sure that you study each component of
inflation because you have seen some
things start to turn
lumber turned in the united states used
cars are starting to turn
fertilizer is starting to turn which
will play into crops which will
play into food prices
so you have to have some framework of
understanding that
two
you want to make sure when you're
looking at investments remember when you
look at an investment there's two things
there's the fundamentals on the basis of
what you're investing
and then there's the price that you
would pay for that
so you have to ask yourself
is inflation being accounted for
in the price that i would pay for this
earnings stream and the new level of
risk that i now see to this earnings
stream
you know i use credit spreads as an
example people always go bananas when
credit spreads get get wide the whole
world's going to end you can't buy
credit because it's at 700 over can't do
it
well
credit spreads imply a default rate the
reason spreads get wide is because
people think there are going to be
wider defaults more defaults because of
inflation because of the economy our job
on the credit side is to say
credit spreads are implying cumulatively
over the next four years something like
20
cumulative defaults um
five six percent a year decline
well if i buy a portfolio of companies
that i think only cumulatively has a
realistic risk we would hope to have our
default rate is one or two percent but
in bad times maybe cumulatively could
have a 12 default rate that sounds
terrible except that i paid
assuming there was a 20 default rate so
we're better off
and it is the price value equation that
that has that you have to think about
and you will see private equity firms
buying not only at lower prices
and probably levering slightly more
conservatively both the market will help
with that and and the firms themselves
but
the business cases that were all running
there's uncertainty out there and when
there's uncertainty you know there's
less price you know
for a while people were paying high
prices in a growing market with lots of
good news
that generally worked for a lot of years
because on the other side the economic
picture and the prices people were
paying made sense yeah yeah
you know
the uncertainty
that we see right now is obviously what
happens in ukraine
you may have noticed some political
instability in the united states
and we have a midterm election coming up
and those things also all come come and
come into play yeah do you think the
price of fuel is one of the critical
components of inflation that
i think that well would that continue or
yeah i mean fuel and food obviously um
are critical and then wages and the gap
between
inflation and in the increase in wages
which i think right now is about a 150
or 200 basis points which is bad but
when people highlight eight percent
inflation
i think some people in their heads
equate that to zero you know zero
percent um on wages so real wage
wage growth is is
is negative wage growth has been
negative for a long time in the united
states and in certain cohorts um
and then there's all sorts of supply
chain issues uh
and
that is one that requires real
analytical work in some time to figure
out how much of that is going to work
itself out
um
you know
everything from trucker shortages to
pilot you go out to heathrow and you
obviously see that there's that is in
and of itself a supply chain problem
what's going there with pilots and
baggage handlers and all that
and
a longer term trend one of my colleagues
pointed out yesterday that i thought was
interesting is this whole just in time
economy
that um we've created that worked great
right up until
it didn't because there was any
interruption in that if you see
global onshoring more domestic um uh
supply more domestic supply chains that
will be inflationary and that's
inflation that will be a little bit more
permanent and figuring out how that
comes into play
um it's so
inflation and stagflation are the most
complicated things you can talk about
but they're not impossible to study and
that's why we have 1300 people yeah and
we know we will be wrong which is why we
are building in more margin of safety in
everything we do
thank you very much jonathan thank you
we are running out of time much
appreciated thank you thank you for
having me thanks for joining us today

---

### Corporate Venture Capital: In conversation with Ilya A Strebulaev
URL: https://www.youtube.com/watch?v=D42his0NfmI

Idioma: en

foreign
[Music]
I would love to talk to you about some
of the insights that you have as part of
the Venture Capital initiative from
Stanford University but first and
foremost maybe let me welcome you back
to your alma mater London Business
School maybe can you tell us just a
little bit about your interest your
research interest and interest Beyond
Academia thank you Gary it's it's great
being back I started at lbs
many years ago between 99 and 2004 in
this beautiful building region in Regis
Park and then I went to Stanford and
I've been a professor of Finance
professor of private equity and bench
Capital since then
and about seven eight years ago I
founded Venture Capital initiative at
Stanford's greatest School of Business
to promote research on Venture Capital
because the truth is not only we don't
know much about venge Capital but the
Venture Capital industry is is
semi-secrative
quite opaque and I think over the last
seven years luckily our team at Stanford
has achieved a lot of interesting
results and a lot of interesting
outcomes including on corporate bench
capital
and this is brilliant because what I
would love to talk to you about is
exactly this topic and and I think as
you mentioned private capital is is
private and so we might not have a full
knowledge of it and within that space
corporate venture capital is
increasingly an important part of the
ecosystem but maybe one that is the
least understood maybe you can start off
by just giving us a scent of the of the
ecology the magnitude of it how many
corporate investors are there a little
bit of sense of What's the magnitude of
of this phenomenon first of all you're
absolutely right
first corporate bench Capital CVC has
becoming increasingly more important
just about 10 years ago there were fewer
than maybe 250 corporate Venture Capital
initiatives
these days there is over a thousand CBC
initiatives around the globe
and I think more companies starting CBC
is every single day
second is that the venge Capital
industry is private as you said and
opaque and also Venture Capital firms
for example institutional venge Capital
firms are structured differently from
the way traditional Financial
intermediaries are structured
but even relative to institutional venge
capital
corporate Venture is different
and an important point to keep in mind
is that while institutional Venture
Capital firms are kind of similar to
each other in many ways I've now studied
more than 200 CVC unit CBC groups CBC
funds very very carefully in depth like
case studies they're all unique they're
all different from each other
so this is an area that I would love to
learn a little bit more when when I talk
to some managers they tell me the most
counter-intuitive thing to do is to take
our hard-earned money and give it to
startups some of them want to compete
with us
and and it takes a different way of
thinking and a different way of
Designing and organizing such efforts I
know that this is a topic that you've
studied very carefully can you maybe
tell us just what are the key Dimensions
one should be thinking of and then maybe
we can go into how to put them all
together
well
yes you're absolutely right that giving
money to startups is a very different
proposition to standard traditional
budget allocation process traditional
projects that especially large companies
have been traditional engagement
when you think about giving money to
startups we need to first of all think
about our objectives
for example companies might have a
defense objective which is they're
trying to defend their existing business
lines all campus might have an offense
objective for example to compete with
encumbents or compete with the newcomers
or trying to identify new business lines
what I observe is that to be successful
in CVC first companies need to have a
very very clear objective
now I often consult with or work with
and of course research a corporate bench
Capital units what I amazed at is very
often the parent executives
who supervise sponsor CVC units very
often do not have a clear objective for
CBC especially clear long-term objective
because it's a long-term game it's not
over the next three quarter three months
four quarters it's a long-term
multi-objective
one word that I would like those who are
in charge of series you're thinking
about CBC to remember is design
based on all my research
Services units succeed or fail based on
how they are designed and the truth is
they should be designed very differently
from traditional
corporate business units so when very
often I'm
invited to help
I tell corporate Executives I will not
be able to answer the questions how you
should design the CVC unit what I will
be able to tell you is first what
questions you actually have to answer I
have a list of 50 questions that many
that you need to answer and second I
definitely will tell you what you should
not do because what you should do
depends on objectives and on a number of
constraints and preference that you have
but independent of those constraints
there are a number of design decisions
for example decision making process
decisions or the subordination decisions
or the compensation decisions that are
unlikely to lead to success
and so I would love to maybe have a
chance to I invite people to kind of
visit the Venture Capital initiative and
the fascinating reports that you've
written on the topic but maybe unpack
one or two issues just to give uh people
a sense of the the level of depth that
goes into that
um and so one question that always comes
to mind has to do with what are the
objectives and specifically how to think
about financial versus strategic uh
returns it's a question that comes a
update time and again can you maybe
share with us how should one think about
it and maybe what are some common
pitfalls one should be mindful of
absolutely well first of all let me step
back for a second and tell you that we
don't study corporate Venture and did
other Adventure films and other players
in the second system just by looking at
the data of course you know as
scientists We Believe data in the venge
Capital world one is to be careful and
well with
um carefully check every single data
point that we get
with the corporate Venture Capital it
would do we go inside corporate bench
Capital units and we talk extensively
with the leaders of those units
so those are in-depth interviews
following a very particular protocol so
that we can learn a lot something that
is not available on their websites or
from hard data and also we can learn
stuff that then we can compare
with other peers in the corporate range
Capital world with institutional Venture
Capital firms and then we also can
compare to eventual outcomes
now to your question
uh I believe that objectives is already
mentioned earlier are very important
truly truly important and I'm amazed how
often
corporate Executives don't have a clear
objective
first item is again as already mentioned
but I would like to emphasize corporate
bench Capital objectives must be
medium to long term
if you have only short-term objectives
or if you care only about short-term
kpis especially if you're a public
company
that's a danger
for having successful corporate Venture
Capital unit
second amazing enough and about a
quarter of cases
we've been told that our units
mostly has or has only financial
objective for example irr
original on Capital and so on
now the truth is that it's unlikely to
be successful with some notable
exceptions when that corporate bench
Capital unit is really outside the
parent structure and the parent is
perhaps the single limited partner LP in
that CVC fund
why it is unlikely to be successful
first is because those cbcs compete with
everybody else with other investors
well their computer was top tier
institutional Venture capitalists it's
very tough
second is that the corporate bench
capital
typically is a very small part of the
parent structure and most of the
estimated management of corporate
Advantage Capital units are not really
in the you know in the 10K income
statement balances and so on
of the parent company because they're
too small
and so Financial even if the CVC unit
returns 5x or 10x which might happen
it's not going to be that visible
where it could be visible dramatically
so and there obviously some very
successful examples by helping the
company
to achieve a number of strategic
objectives
for example
I know companies where with the CBC help
in five year time
up to a third of the entire revenue of
the company
got from the initiatives started by CVC
so that that is an impact and it's Way
Beyond the specific financial
performance or specific
assets under management of their CVC
unit so to sum up long term
and then I cannot tell you if you're a
parent executive whether you should
pursue a specific objective whether it's
defense offense and there are other
possible objectives but you have to
think through what is the long-term
objective for the CVC unit that that you
must have so this is very important uh
Insight in and I think what you're
telling us is even if the CVC achieves a
top-rate uh return on the AUM that's not
going to move the needle for the
corporate it's really kind of impacting
the way the corporation is doing
business you said up to a fifth of the
product line is affected I think that is
a very important way of thinking about
it if if I can kind of
there's so many dimensions I can think
of along the design but maybe one that
makes this come to life so we talked
about the kind of 30 000 feet what are
the objectives where objectives
translate into reality is in the
investment committee
and I know that you have worked very
closely and have some deep insights into
that space can you maybe tell us in in
the spirit of what you talked about
earlier what are some red flags and what
might be some things that actually
enable a very um effective process
absolutely just first of all just to to
confirm what you've said Gary is that
financial performance per se
is not everything
um I know of some successful CBC units
financially that have been disbanded by
their corporation just because the
nature of the corporation changes and
financial performance
then would not really save the corporate
bench capital
indeed the way the investment committee
works and more broadly the
decision-making process
is critical for success
when we think about institutional vanish
Capital then most of them organized as
Partnerships research shows between four
and seven Partners even though sometimes
of course
funds are much larger
and
they do have investment committees and
sometimes Partners make decision
unanimously which means really everybody
has to be enthusiastic about the deal or
sometimes there is a formal majority
award and so on
when we come to the Corp Adventure World
then typically the decision-making
process consists of two steps
the first step of the first stage
is the internal decision by the
corporate venge Capital team
and within that decision the Investment
Partners even though they typically not
called This Way of the CDC team
have to make a decision whether they're
interested in that specific investment
and the way they come up with this
decision in fact is very similar to the
way Partners at the institutional venge
Capital firm make decisions
but while for the institutional venge
Capital firm that's the end of the story
they do not like the deal that's that
but if they like the deal then they give
a term okay an offer to invest for
the CBC it's often
um only the first step
the second step is that they actually
have to go to the real kind of
investment committee which is the parent
investment committee
and I observed a lot of situations which
I think are sub-optimal
so several Suboxone situations one
The Firm has one investment committee
for all sorts of outside Investments for
example if we think about a majority
investment which is let's say an
acquisition of half a billion dollars
or a minority investment of two million
dollars in a small struggling fledgling
startup it's going to be the same
investment committee
it is sub-optimal from from all points
of view
second example is
CVC leadership often is not a part of
that second investment committee now
they of course present the information
they provide information they try to
convince but they they're really Beggars
so they're asking to approve the deal
the investment committee will consist of
senior Executives of the parent
sometimes presence of the business unit
cfoc for representative CEO the CEO
representative
the head of strategy
gel Council and so on
and our research shows that on average
is between five and seven people in the
investment committee now those people
first they don't really have an
expertise
in the world of startups which is so
different from their day-to-day life
second they typically make decisions
that are much larger than you know two
to five million dollar Investments now
for them in fact
it's time wasted in many ways
and what it leads to is that
first of all it dramatically slows down
the process in fact many cbcs told me
that one of their challenges they cannot
invest in the best deals
for a simple reason that they will tell
the company you know we love you but the
truth is you're so successful and you
already
raising you're really finalizing around
well you know you need to give us like
three months
and so they lose a lot of bills second
very often the most interesting deals
are the ones that controversially that
at the time
when they're small startups
and either the parent level exact
investment committees don't really
understand those those deals because
they don't see direct applications for
for their company
or in fact they never see those deals
because at the internal first stage CVC
level
the CBC leaders decide not to bring
those deals forward knowing that that
they're controversial so very often I've
been told well
we socialize the deals we've
never been turned down
because we just don't bring the deals
that
are unlikely to be to be approved or
likely to be looked down upon that is
very very unfortunate
and while the there could be many
solutions how to deal with that I I just
think that if you happen to have a CVC
where the actual decision is made by
those who don't have specific expertise
on the venture capital
my suggestion would be to step away from
that
it doesn't mean and that's a very
important point it doesn't mean that the
parent Executives should not play a role
I actually think that they should not
give complete free reign like in the
institutional bench Capital so they're
not really LPS they're strategic
Partners they are sponsors
they in my opinion should not make
individual decisions
up to a certain level which in fact
should be quite generous
they should make or participate in
portfolio decisions how they perform Ed
is going to be made that really depends
on your objectives and so on
but once you once you have a specific
portfolio allocation not just how many
companies will invest per year how many
of those will invest per year what
specific strategic objectives
Vero should give the CBC team the
freedom to invest within those
parameters do not wait for the approval
on an individual deal
and that is very likely to be to lead to
much more successful long-term
implications
Ilia I think that this was a great
example how you deliver on your promise
to demystify venture capital in general
and even just the breadth of insight
into ICS within the context of corporate
Venture capitalists
um I'm mindful of the time and so I'd
like to thank you for now I would invite
our listeners to either reach out to you
or look at the all the insights that
you've generated uh and he's posted as
part of the Venture Capital initiative
and uh thank you again for sharing this
with your uh the communities that is
part of your alma mater and The
Institute of Entrepreneurship and
private Capital absolutely thank you
Gary thank you for welcoming me back LPS
is a very very special for me so I'm I'm
always happy to be to be back to my own
mother

---

### Venture Capital Investing: In conversation with Ramana Nanda
URL: https://www.youtube.com/watch?v=VB54-FM_KKg

Idioma: en

foreign
[Music]
delighted to have this opportunity to
kind of pick your brain and you've been
really studying the topic of innovation
in venture capital for for many many
years uh we've seen over the last two
maybe more decades Venture Capital being
instrumental to driving innovation in
many walks of life
um I was wondering if you can spell out
what are some of the strengths or
advantages of the Venture Capital model
um please go ahead yeah absolutely so
one of the things that academics like us
have been studying uh quite a lot over
the last several years is the the ways
in which venture capital is able to
support these companies just to put it
in context in the US for example just
less than one percent of companies
something like 0.5 percent of companies
every year get around a venture capital
financing but then over half the
companies or about half the companies
that are going public every year have
received Venture Capital so it's really
disproportionately associated with the
high growth high impact High job
creation High Innovation companies
so one question obviously that academics
spend a lot of time thinking about is
the degree to which Venture capitalists
are just good at picking companies that
will ultimately be successful or do they
actually help them become successful
through their value-added work and
there's two quite distinct ways in which
people have noted that VCS Provide
support one is through governance so
they're there to make sure that
the the best interests of the companies
rather than necessarily just the best
interest of the founders are being taken
care of and there will be instances
where the founders interests and the
company's interests might diverge and
strong governance can help with that not
just publicly traded companies but with
private companies as well the second is
VCS obviously have a strong Network
associated with their work with the
portfolio of companies that they have
and so they can use that Network to to
Bear to help find strong Talent
potential customers suppliers and indeed
they play often a they have a
reputational benefit where the best
employees might be more interested in
joining a venture capital back firm
because they know that there's been some
amount of vetting that's taken place
there may be Capital that will keep this
company alive for a certain period of
time and they're more willing to
actually join in and take those jobs
thank you very much for sharing these
insights I know that in some of your
other work you've looked at the
Persistence of performance across
different vintages or in different funds
and I was wondering if you can help us
unpack where does the persistence or
challenges thereof comes to within the
Venture Capital asset class
yeah so one of the fascinating things
about venture capital in particular and
private Equity as a as a general asset
class is this persistence in performance
across funds which is something that we
don't see in the public Equity markets
and so one natural question that arises
is what's the source of this persistence
and clearly the value that Venture
capitalists add is an important
potential source of that persistence and
performance
some of the work that I've been doing
and others have done suggest that in
fact while there is persistence in
performance in VC there is also mean
reversion it just happens over a longer
period of time
and and one reason for that a longer
period of time before mean reversion
fully takes place is the fact that
Venture Capital deals are bilaterally
negotiated deals so it's not the case
that just the best price will always get
into the deal if you've developed a
reputation to be a value-added investor
you have the ability to come in and and
get a deal on more favorable terms than
somebody else who may have given a
better price but doesn't have the same
reputation because entrepreneurs value
that value ad that the investors bring
to the table
and so one of the things that we've seen
is that uh this persistence uh seems to
come from access to deal flow which is
that you may have been helpful to
companies
um and had a great uh return
it's not necessarily the case that you
were that disproportionately better than
the next VC we know VCS in general add
value but differences in value add
across VCS don't necessarily always
translate to the differences in
performance some of that appears to come
from the fact that those who are
initially successful are able to attract
better deal flow and because of that are
able to perpetuate their their
performance over several funds so this
is brilliant if I take this insight
about that kind of proprietary access to
deal flow and I take the starting
observation of actually a fraction less
than one percent of all companies
actually get Venture Capital there's one
question that comes to mind which is
what's the best use case for venture
capital and maybe next to it what are
some of the challenges uh that we can
see associated with the Venture Capital
model I know that you've been thinking
about these issues can you share some of
those observations with us yeah
absolutely I think venture capital is
particularly uh helpful for companies
where you can de-risk quickly and
cheaply and where the key risk that you
face is Market risk and they have done a
fantastic job over the last several
decades particularly the last uh 20
years
in helping companies get better at this
early experimentation
addressing some key challenges around
whether customer is actually want to buy
the product what the unit economics are
and then transitioning to growth stage
Capital to help scale the businesses as
they learn that those are actually
viable companies
in general Venture capitalists have been
less Adept at taking on a lot of
technical risk and that's often because
the case that they don't have the strong
technical due diligence capabilities
in-house
one big exception is the Biotech
Industry which has indeed a lot of
technical risk but one of the
differences in the Biotech Industry is
that the Milestones are reasonably well
understood so there is a bit of a
Playbook and that Playbook is dictated
to some degree by the FDA and the
Milestones that are required by the FDA
in some areas like deep Tech which I'm
particularly passionate about things
like renewable energy generation carbon
capture and sequestration new
sustainable materials there is massive
technical risk and there's Market risk
at the same time and the two are quite
related to each other so the degree to
which a technology works at a certain
level the unit economics is going to
drive which customers are going to be
interested in that product or not and so
there is this
deep relationship between the degree to
which you are able to solve certain
technical challenges and the size of the
market that is open and available to you
in general because the very strong irrs
that the the VCS set for themselves they
need often want to get five to ten times
their money in five years time it's hard
for them to spend a lot of time and
money on the de-risking side of things
and they tend to Value correctly
companies that are ones where you can
learn quickly and cheaply and so one of
the things that we've noticed is that
there's been a five-fold increase in in
Venture money that has come into the
industry over the last decade but almost
all of that has gone gone and come from
information technology software Services
consumer and business products where in
fact it is possible to there isn't that
much technical risk and it's possible to
relatively quickly understand what's the
key barrier to adoption do customers
actually want this or not and then
generate the unit economics that allow
you to then begin scaling the business
so this is fascinating I think what
you're telling us is that some of the
challenges in driving Innovation may be
outside the ICT Industries is not the
dread of capital in fact as you
mentioned there's many fault amounts of
capital flowing into the market over the
last few years but it really is this
time Horizon and the different type of
risk the technical risk that that is um
that is what investors are facing if I
can ask you you've clearly thought about
these topics long and hard if you can
Envision what might be a vehicle or what
might be an entity that can potentially
unlock these challenges and kind of
facilitate the FedEx exploration and
maybe commercialization of deep Tech
what might that look like
yeah so I think one thing that you you
brought up which is a really important
point is that Capital intensity itself
doesn't appear to be a barrier for
Venture capitalists we've seen hundreds
of millions of dollars deployed into
unicorns over the last decade and
and I think the reason why VCS are able
to do that is because that money has
come in to help scale the business it
hasn't come in to try to de-risk and
learn whether it's actually viable and
so as we begin to think about where the
friction lies
um particularly with these with these
deep Tech kinds of businesses uh one
clear area seems to be the cost and the
time taken to de-risk rather than to
scale
I think the second thing to note is that
these deep Tech uh
Technologies are really important for
solving Global challenges climate
sustainability Health
a lot of those Innovations the
fundamental science and innovations that
underpin these Technologies are
increasingly coming from universities
and obviously the university incentive
model and the ecosystem is quite
different in many ways and not
necessarily conducive to building
businesses the academics are often
interested in in their own academic
Enterprise
the university often thinks about
patenting as a cost center rather than a
source of value and so as we begin to
think about the the sets of challenges
that exist here in terms of the
frictions there's one clear one around
technical risk there's another one
Around Talent and then there's a third
around thinking about business models
and value creation value capture
so one of the things we've been trying
to do at Imperial is to use that kind of
uh friction-based approach to
understanding what are the barriers and
what can we do to solve it as a way to
approach a potential solution and we've
been working as part of this new deep
Tech Institute to put in place a
structure that can perhaps do the best
of universities bringing that patient
non-dilutive Capital that supports the
the nature of de-risking in science
which can you know is unpredictable and
requires time
paired with the strong technical Talent
the the lab space the specialized
equipment that the university already
has and so can be made available to
these projects on a marginal cost basis
rather than making the full fixed
investment and then pairing that with
project management that we know is so
important the governance that we spoke
about before the value add around
helping to bring talent and really
understand what are the key Technical
and business Milestones that the next
investor is looking for and how can we
work backwards from those to try to
achieve them so that then we have value
inflection when we achieve those
milestones
so uh we're at the very early stages of
this we've been working hard to
conceptualize it and now uh actually ran
our first pilot uh in January we gave
nine uh pre-ventures projects uh about
850 000 pounds uh buying each of them
about six months of Runway and there's
been a a very interesting set of
learnings that we have begun to get from
that and we're in the process of
thinking about how to scale it up as one
possible solution to this big big
problem I certainly feel like this is
one of the grand challenges of our time
we we talk about climate and health and
security as as being Grand challenges
and I think that's absolutely right but
I also feel like the solutions to those
grand challenges uh depend on technology
that exists in universities and in many
ways is stuck and increasingly stuck and
so if we don't solve if we want to solve
those grand challenges we have to solve
this other Grand Challenge of getting
into you know technology out of
universities uh and that's kind of what
I'm excited about so thank you very much
this is uh clearly a very exciting
experiment I was wondering if you can
help us think about Envision what would
success look like down the line yeah so
we have a very I would say ambitious and
audacious goal here
one element of the goal is to support
Technologies coming out of Imperial and
we we believe we have the ability or the
tech the talent pipeline to put about 15
to 16 companies per cohort per year over
the next 10 years so something like 150
or 160 pre-commercial ideas that are
attacking big problems have the
potential to generate a lot of cash but
face technical de-risking that we can
help reduce so one clear goal is to help
generate higher quality deal flow
foreign investors Venture Capital
investors
by precisely delivering to them higher
quality Investments that are more close
to what they need in order to make their
initial investment and so on one hand I
think we have a an ambition that we
would have something like five or
ten unicorns coming out of this 160
which is very proportional to the kinds
of returns that you see in in Venture
Capital but I think there's a broader
set of goals here one is to really
develop a deep understanding of the
frictions associated with building deep
Tech Ventures and much the same way that
we have a great understanding of
Information Technology and a great
understanding of how to build these
companies and and in the way that often
universities like Stanford are
associated with the information
technology Revolution it's our ambition
that Imperial plays a really important
part in driving the understanding of the
barriers to commercialization of deep
Tech and indeed helps to develop a
framework and a set of tools that can
help
practitioners as well as policy makers
think about evidence-based policies that
can support deep Tech and I think
beyond that uh kind of bringing it back
to the UK one thing that uh is is
interesting uh and an ambition for us is
to develop a strong deep Tech ecosystem
uh we have incredible universities in
the UK if you look at the league tables
in the world uh four out of the top ten
universities are from the UK there's
very strong scientific Talent there's a
government that appears committed to
trying to really get behind Science and
Technology we have a great financial
services industry here that can really
think creatively about the sources of
capital and we have a very strong Tech
Community of entrepreneurs and so I
think all the ingredients around
building a great deep Tech ecosystem are
there and it's really about trying to
support that that uh the the the the
city the universities here the country
achieve achieve its potential well it's
it's really great to be here with you as
you are embarking on this important
challenge I think that when all of this
will come to fruition will all be better
off as a result of that thank you so
much for sharing your insights with us I
really appreciate it thank you so much

---

### Exploring GenAI's Impact on Industry Transformation and Private Equity | LBS Experts Discuss
URL: https://www.youtube.com/watch?v=pXbPVDg759Y

Idioma: en

[Music]
hello I'm Michael jacobas the sidonald
Gordon professor of Entrepreneurship and
Innovation and professor of strategy at
London Business School and Lead adviser
at Evolution limited and I'm joined here
by Yuri romanenkov who is the academic
director of our next Generation digital
strategies program at lbs and a senior
advisor at Evolution limited and we're
speaking about this impact of gen and
private Equity Michael everyone's
talking about gen what is different
about this work this work is trying to
go beyond the use cases which is what
everyone has looked at and to consider
whether the hype is Justified or not so
we're looking not only at how people are
employing geni but also what are the
expectations for industry transformation
and the most interesting findings come
from figuring out where we're going to
see impact then we not and it's not
going to be the same in Industries it
also varies by business models and we
get some cool data in terms of how
organizations differ in their ability of
responding to gen one of the main
observations there relates to corporate
inequalities widening potentially as a
result of this what explains that and
how do we think about it generally
Technologies digital Technologies
amplify the inequalities they give the
possibility to some firms to scale up
and uh get a bigger part of the market
share but here what we see is that they
also get new attributes that are
important in success so things like
proprietary data become very important
if you have proprietary data then you
can leverage uh the new technologies and
what geni does and helping you
understand what the patterns are and you
are able to find new ways of serving
your customers or even expand beyond the
offerings
uh that you get so we see that there's
going to be winners are those who will
get the information infrastructure as
well as be able to embed uh the results
of what gen tells you in their own
operations so let's go a little bit at
the firms that report that they have
seen transformative impact around 22% in
our sample uh say they've seen it what
explains that one of the things that we
find about these 22% of firms is that
they go beyond the obvious they don't
just focus on the the easier more
modular cost of productivity initiatives
that are easy for everyone to replicate
but they go beyond that they look to gen
for potential for new business models
they look to gen for a step change in
customer engagement and we find that the
proportion of firms experimenting with
these different value levers is
considerably higher amongst companies
that experience high impact than those
that experience low impact that said
though Michael what do you think what is
it that ultimately gives you the right
to win in there what does it take to be
able to deliver on gen at scale the
funny thing is that the answer is not
technological uh what you need to do is
to first of all embed gen we see that
companies that are successful are not
the ones that just try everything and
they are broad but they are deep that
they are consistent in the way that they
use gen and that they ensure that they
do that regularly and in particular
those that for the more sensitive parts
of their Organization for operations and
for um uh the way that they engage with
the customers uh employ gen it also is
important uh to see that those that win
are those that look at the
implementation of gen I and the
engagement not only of Technology but
also of the changes in strategy and the
changes organization that are going to
make a difference so once again it has
much more to do with you're having a
strategic take than thinking about
technology and hoping that technology
will lift all boats and will yield
dividends so let's look at private
Equity what does it mean for private
Equity investors it's interesting
because I think it means means a number
of different things for different
private Equity players if you're a large
cap buyout investor and you were
generally
historically concerned about changes in
business models then the disruption of
Industries and this this redistribution
of economic profit that you just
described is potentially very alarming
news so they need to build a profound
view of their own of what geni means for
the industries they're looking at for
growth investors who who look at
companies at slightly earlier stages in
their development that's actually
excellent news because they may place
bets on the winners and not the losers
and look at the capabilities and look at
the value levers in a way that can um
can capture value for them and their LPS
But ultimately when we think about it
practically they need a a new way of
doing due diligence on these companies
they need to make sure that they look
outside in they really understand how
technology links to these value levers
that we were talking about and for their
portfolio companies how they engage with
with the management teams there they
need to really work with them to help
them build the right capabilities that
these companies need to make the most
out of this this really exciting
technological Revolution so many ways

---

