Mach49’s new managing director and VC-in-Residence, Paul Holland, shares the ways they help clients develop world-class corporate venture groups and engage successfully with startup ecosystems around the world.
During these difficult times, the instinct for some business leaders will be to pull back, conserve, and wait it out. Forward-thinking leaders, on the other hand, view these unprecedented times as a once-in-a-generation opportunity to “seize the moment” and focus on growth and disruption. Mach49, a Silicon Valley-based growth incubator, helps them do exactly that.
By creating a “venture flywheel” inside of the mothership, Mach49 helps companies generate a sustainable pipeline and portfolio of new disruptive ventures. This is accomplished through a unique alchemy of employee-staffed incubations co-created with clients, corporate investment in startups, and partner programs between the corporation and the venture startup community.
“There is no reason large companies cannot beat startups and drive meaningful growth from disruption,” argues Mach49’s VC-in-Residence and Managing Director, Paul Holland. “It is a question of capabilities, not resources. Global businesses are fundamentally different from venture capital firms, so at Mach49, we work very hard to create an environment for success that takes key lessons from traditional VCs but applies them in a way that leverages their strengths and opportunities.”
Mach49 works with their clients to design, launch, and manage world-class CVC funds that leverage the experience, deal flow, global network, and success of top-tier Silicon ValleyVCs. In addition to offering a "program-in-a-box" solution for partnering with and leveraging startups to address current business challenges, Mach49 offers VC-in-Residence support to internal Executive Investment Committees that are investing off the balance sheet without a CVC. These offerings combined with their incubation and acceleration capabilities give global businesses the ability to tailor a disruption strategy that aligns with their growth objectives.
“We have found that many corporates lack a playbook for investing in startups,” Holland explains, “or for developing relationships with VCs, entrepreneurs, leading universities, and subject matter experts in a meaningful way. This is the gap that we are filling.” With Mach49, clients learn to think and operate like a top-tier VC firm. “More than ever, corporate leaders need to think like Silicon Valley insiders so that the next time a unicorn appears in their market, they are already involved with it. We show them how to work with startups like a VC, not a management review board; how to move fast, and how to measure their success in terms of option value rather than the net-present view they are often used to.”
Another important area of focus is what Mach49 calls “mothership management”. This refers to a set of best practices and tools for incorporating the corporate parent into venturing in a way that maximizes value and reduces friction. “We call this friction inertia,” says Holland, “which is basically bureaucracy and other obstacles.” To aid efficiency, Mach49 identifies internal ambassadors and builds a network inside the mothership that is linked to the new CVC group.
Establishing the CVC structure and ecosystem must include an investment board and internal ambassadors who will support the CVC unit and the portfolio companies. “This is a huge undertaking, and one that requires real-world experience,” says Holland. “You need to define the investment committee role and decision criteria, ensure integration with the company’s strategic agenda, share pros and cons of internal versus external investment board members, and agree to governance details — including an investment decision matrix and process to move with speed and agility.”
Typically, Mach49 encounters three different scenarios when working with clients. The first involves a homegrown leader who has been tasked with building the CVC team from scratch. In this case, Mach49 helps them design and create their CVC, recruit the team, and plug them into the deal flow both in Silicon Valley and abroad. “Often we find companies have different needs in terms of the global startup ecosystems they want to participate in,” says Holland. “Whatever the case, we guide them through all aspects of the investing process.”
The second situation is when the CVC unit needs a leader who cannot be found within the company. “In this case, we look to our network to find a managing director-level investor who can fill that role,” says Holland. Mach49 then builds a team with members from the mothership, who can provide knowledge of internal networks and company history that are crucial to the fund’s success.
Last but not least, a company may want to pull the trigger on a fund but needs more time before they can have boots on the ground in desired markets, particularly Silicon Valley. “In this case,” says Holland, “we act as their team on the ground, focusing on lining up deal flow and guiding them through the investment process until they are ready to put down roots.”
“When you think about the resources and talent prevalent throughout these organizations, the potential to dominate innovation is actually staggering,” says Holland. “Whether it is through creating their own venture fund or spinning-out a startup that otherwise might have surfaced in the market to eat their lunch, our goal at Mach49 is always to use the experience and knowledge we have gathered over decades in Silicon Valley to help corporates find the best path to success.”