From venture building to investments: how SEA’s corporations are innovating

When you think of innovation, you would probably think of startups that are quick to roll out new solutions. Corporations might not even come to mind because they’re usually seen to move slowly.

It might come as a surprise, then, that large companies are driving an increasing amount of innovation, particularly in the Southeast Asian tech ecosystem.

I recently dove into the Stryber Corporate Venture Building Report for the region to take a closer look at the innovation happening within Southeast Asia’s corporations.

As the report puts it, there are three main ways big firms are innovating: corporate venture building, corporate venture capital, and the more traditional mergers and acquisitions. While M&As are well understood, the two other methods are relatively more nascent and worth exploring in detail.

Image credit: Stryber

What is corporate venture building?

I consider corporate venture building a bit like the startup accelerator model but for corporations. And as we all know, large companies are typically slow so they need some acceleration.

Corporate employees are not normally accustomed to the pace and intensity of a startup. To foster innovation, particularly regarding new business models, large companies need to do it outside their normal construct.

One option is to have an in-house team focused on the process, or what Stryber refers to as internal venture building. Examples of this would be Standard Chartered’s SCVentures or Bank of Ayudhya’s Krungsri Finnovate.

Another option is to use an external venture building partner like Stryber or Leap by McKinsey. This is the usual setup of corporate venture builders or CVBs.

According to the Stryber report, CVBs “provide a ‘turnkey’ implementation for startups and usually work for a fee and/or receive co-ownership with their corporate clients.”

In Southeast Asia, there appear to be 56 venture builders in total as of the end of last year, with CVBs comprising 34 of them.

Image credit: Stryber

What is clear is that this model seems to be growing and working globally. Per the Stryber report, there were 13 venture studios founded globally from 1995 to 2000. The figure for 2016 to 2021 was 723.

I believe this is due to the disruption many corporations have seen to various parts of their businesses. As their unwieldy nature makes change difficult, investing in venture building is the most sensible way for corporations to adapt.

This setup also means that the new ventures benefit from the corporation’s advantages such as capital, connections, and customers.

Corporate venture capital

Corporate venture capital is, as you may imagine, when large companies invest in the same manner as traditional VC firms do. They typically use dedicated investment vehicles to do so.

Sometimes corporate backers seed a company or they invest at the series B or C stage. They’ve got deep pockets and interest in playing at various stages, which is quite different from traditional VC firms that usually focus on a single stage.

What I like about this setup is a corporation’s ability to support startups from their inception. This gives them knowledge of how the new venture handles adversity as well as an idea of whether or not the startup is worth investing in at a later stage.

Traditional VC funding declined significantly between 2021 and 2022. According to Stryber’s statistics, the total number of deals fell by 25% year on year, from 36,000 in 2021 to 27,000 in 2022.

But per the chart below, corporate-backed investments had a much less-pronounced drop in the number of deals – just 2% over the same period.

Image credit: Stryber

These corporations likely made these investments purely as gambles. Some may have backed the ventures because they could be the future of their core company. In this scenario, a slowing economy and a declining core business would motivate a corporation to invest more.

According to the report, over 170 corporate VC deals happened in Southeast Asia last year, totaling US$2.9 billion in volume. Most of these investments went to Singapore, with Indonesia coming in second.

Image credit: Stryber

Adapt or die

I can only see corporate venture building and corporate venture capital getting bigger, thanks to my time working in consulting with corporations and my three years at Visa in Russia and Ukraine.

I’ve seen firsthand how slow corporations are, how bureaucratic they can be, and how archaic some of their management processes are.

Some will die or be eaten by young companies that are operating faster and have hungrier employees. But the smart corporations will realize that they must invest in new business models and startups.

Take Visa for example. When I worked there in 2010, its market cap was about US$48 billion. Today, that figure is at US$452 billion.

The firm’s core business has barely evolved and there has been little visible innovation over the last 13 years. However, it has invested in various startups and tech companies, many of them leading to good returns.

With the financial backing of corporations and the latitude to take risks like a startup, corporate venture building and corporate venture capital could very well drive a lot of innovation going forward.


Ken Leaver

An American ex-strategy consultant that found himself in Lazada in 2014 and just loved the region so much he decided to stay. Now I call myself a 'product guy' and freelance while living in Bangkok.

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