#9: Hiring for Corporate Venture Capital teams & trends
Hi, I'm Jeppe and welcome to my weekly newsletter on Corporate Venturing, released every Tuesday. My aim is to provide a comprehensive perspective on the latest developments in the field and its related topics, drawing from the insights of top management, venture capitalists, founders, LPs, and family offices. I aim to offer valuable information and thought-provoking content that will aid in understanding the importance of Corporate Venturing in business strategy.
This weeks newsletter is co-created with Elena Obukhova, Partner at The Big Search.
I've worked with Elena on projects in the past. Hiring for the CVC team or for portfolio companies. By the way, she is great.
The topic of today is "Hiring for Corporate Venture Capital and trends". Elena and I spoke a couple of weeks back and below you find a summary of the 6 questions I asked her.
In your experience, what profiles make the best team in a CVC? Do you typically see external or internal hires succeed best?
In our experience best CVC teams are set up similarly to the best VC teams, meaning the team comprises a mix of investors and operators. Investors bring expertise in deal sourcing, due diligence, and portfolio management, while operators can provide valuable industry-specific knowledge, operational experience, and network.
It's also essential to have a mix of internal and external hires on the team. Internal hires can leverage the company's culture, resources, and network, while external hires can bring in fresh perspectives, new ideas, and diverse experiences.
OMERS Ventures is a good example of a diverse investment team, where you have investors like Harry Briggs (ex-BGF, ex-Balderton) and Jambu Palaniappan (ex-Uber). While Damien Steel, who is the Global Head of Ventures is based in Toronto, where he can stay close to the parent company & leverage the corporateās full potential.
What characteristics/CV do you look for when hiring for a CVC?
When hiring at a more junior-mid level (Associate-Principal) we often look for similar criteria: strong financial acumen, relevant industry experience, network, entrepreneurial mindset, etc. Once we start hiring for more senior profiles (Partner-Managing Partner) we add the ability to manage complex stakeholders to our scorecard. Ideally, the person has been exposed to working with corporates in the past and understands how to leverage its strengths and overcome (and more importantly anticipate) challenges. Not everyone in the team needs to have this, but we found it very important for at least one senior team member to have this knowledge.
How does compensation packages differ between VC and CVC?
The base salary for CVC employees is generally competitive with traditional VC firms. From our experience top CVC funds (large, well-established) tend to pay higher base salaries than Tier 2,3 VCs, and can be competitive with Tier 1 VCs (this excludes top US VC funds, as those are the highest payers). From our experience, CVC employees are often incentivised by bonuses, rather than carry. We have, however, seen a change in the past 18-24 months, whereby CVC funds are setting up carry-like structures. Often it is not a classic 2/20 model, but it can be still attractive for some candidates as there is no pressure to fundraise. In traditional VC firms, carry is a key component of compensation for investment professionals and can account for a significant portion of their total compensation. CVC total compensation packages also tend to include attractive benefits, which can be appealing to some candidates, but often overlooked and not considered as important.
What are the main differences between US and European funds
Overall US funds are considered to take more risk in comparison to European. From a candidate perspective, there is a lot of interest in working for US funds, as they are perceived to have a truly global mentality to investing. As mentioned above, US funds are still top payers. We donāt have a large dataset, but from a few data points, we also see US CVC funds pay more than their European counterparts.
Is it more difficult and/or time-consuming to hire for a CVC - and if so, why is that?
Searchers for investors, whether for VC or CVC, take the longest at The Big Search compared to other C-suite searches. This is mainly because the investment teams are lean, and the team usually requires a long-term commitment to each other heightening the importance of culture fit. Hiring for a CVC fund can be more difficult and time-consuming, however. Some challenges we came across:
Compensation and Long Term Incentive Plan structures: It can take more time to hire for CVCs, especially if compensation and long-term incentive plans (LTIPs) are not yet finalised or in progress. Candidates are more hesitant to commit to a job without a clear understanding of their compensation and incentives.
Sometimes we have experienced heavy involvement from HR, which can be helpful in streamlining the process but can also be a potential blocker. The HR team may need to coordinate with the parent company's HR department and this can delay the process.
Generally, pure-play VC investors are not open to moving into CVC funds due to a perception or prejudice about how CVCs operate. This means that we may need to spend more time with candidates upfront trying to engage them.
What are the latest trends in CVC/VC recruitment?
Increasing demand for female investors (on every level). A lot of funds are competing for the same talent pool. Ultimately, the funds that end up "winning" are those that have built a good brand (both in terms of track record and culture), are willing to offer a competitive compensation package and offer flexibility with regards to location and remote work set-ups. Some funds understand how difficult it is to bring a strong female investor on board and are open-minded about different candidate backgrounds. For example, we've seen a few operators with angel investing experience that have been hired as senior investors (eg. Gemma Bloemen from Creandum, Dinika Mahtani from Cherry Ventures, Cleo Sham at Stride.VC).
Increasing demand from candidates to join US funds (Sequoia Capital, General Catalyst, Lightspeed etc).
Emergence of new value-add operational roles in funds (talent, finance, etc). There's a massive trend in building out platform/portfolio development/ecosystem functions that get involved not just in portfolio support but also early-stage deal sourcing and dd, as well as external branding, marketing and communications.
Funds have started to incentivise junior team members with carry as a retention strategy.
Increasing demand for German-based investors. A lot of London head-quartered funds are looking to expand and often turn to Germany as one of the biggest markets in Europe. Some of the moves include: Alexander Schmitt moving to Lightspeed, Cornelius Menke joining Sequoia Capital, Maximilian Mayer going to Activant Capital. This is also in addition to postings we see from Northzone and Creadum that are also hiring in Berlin.