Use global markets to your advantage
Dating Group CIO Bill Alena is a RevOps and CVC executive with over 20 years of experience in digital media and online dating.
For businesses to survive in today’s ever-changing business environment, they must innovate. This is true whether your organization is a scrappy startup or a global enterprise. But for large companies, maintaining a culture of innovation can be difficult. Startups have it in their DNA, but as companies grow, they often get bogged down in processes, bureaucracies, and false security.
This is one of the main reasons why many Fortune 500 companies that existed around 50 years ago no longer exist. They were unwilling to adapt to changing market conditions. Movie rental company Blockbuster is perhaps the poster child for what happens when businesses go sedentary. In 2008, Blockbuster CEO Jim Keyes said, “Neither Redbox nor Netflix are even on the radar screen in terms of competition.”
Obviously, this quote hasn’t aged very well.
However, not all companies are used to resting on their laurels. General Electric (GE) is a prime example. The company has stood the test of time and has become one of the most diverse companies in the world. Historically, large corporations such as GE have approached innovation initiatives through R&D – General Electric Research Laboratory was the first industrial research center in the United States.
The other way starving companies grow is by relying on teams of M&A professionals to scour the wilds for good prospects to acquire. The theory is that buying a successful product is less risky than building it from scratch. However, both R&D and internal M&A have their pros and cons. This is why a third vehicle known as corporate venture capital has started to reappear.
Although CVC has its roots in Pierre S. du Pont’s investment in General Motors, it is still a relatively young specialty. But it’s growing fast. Ten years ago, Estimated AdvisoryCloud there were over 10,000 chief investment officers (CIOs) and C-level investment executives in the United States alone. According to a Zippia Analysisthis estimate is now over 17,000 investment officers.
HVAC activity on the rise
Venture capital funds come in different shapes and sizes. But traditionally, they are affiliated with large companies interested in participating in innovation within the targeted industries. And CVCs represent a rapidly growing segment of the financing market.
According to CB Insights, HVAC activity reached record levels in 2021, with investments reaching $169.3 billion. CB Insights also reported that 221 new CVCs were created during the year, with fundraising activity up 142% year-over-year from the prior year.
For context, Dating Group is quite active in the CVC space. We are moving forward with a layered approach, with a traditional venture capital fund to invest in startups at all stages and a recently launched accelerator. The accelerator is designed just for early-stage startups with which we can offer a myriad of expert support tools that go way beyond money.
Keeping an eye on global markets
With so many CVCs competing for strategic investments, as well as VCs, private equity, investment banks and more, it can be difficult for CIOs to find the right companies to invest in, with the right terms. . But following a good strategy can make all the difference. The one who has worked wonders for many comes from the Oracle of Omaha himself, Warren Buffett. As Buffett so aptly said, “Be afraid when others are greedy. Be greedy when others are afraid.”
This applies to both CVCs and retail equity investors, as investing in quality companies during market corrections is always a great strategy. In some European countries, there will soon be many investment opportunities, especially in the technology sector. Here is a brief analysis of my thinking in this regard.
A focus on Europe
Some of the brightest and most promising technologists in the United States hail from Eastern European countries such as Belarus and Russia. Although founders in the region often run US-based companies, many have maintained overseas engineering and R&D operations. But on February 24, 2022, the invasion of Ukraine changed everything.
Markets collapsed and thousands of talented tech workers were displaced. Today, these highly skilled professionals call Cyprus, Malta, Poland and other countries home. And there is no doubt in my mind that many will blaze new trails with ideas and innovations that could be worth billions. As such, regions not traditionally known for technology may soon become hotbeds of innovation.
An AI boom in small countries
Right now, motivated and skilled professionals working in the field of artificial intelligence (AI) are busy building new networks, incubators, labs and consortia in countries like Cyprus and Armenia. Some even build them without a central location. Their goal is to develop new projects and businesses that advance the field of AI. According to StatistaThe global AI software market is expected to grow rapidly in the coming years, reaching around $126 billion by 2025.
AI will be a driver of the global economy for years to come. Everything from healthcare and retail to concepts like Web3 and the Metaverse will rely on AI applications. All of these are huge markets in themselves. For example, Statista anticipates the metaverse alone will reach $678.8 billion by 2030.
Specifically, the dating world is ideally placed to thrive in AI and the metaverse. Personally, I see a large influx of early-stage startups attacking this space, with much of the development work coming from Eastern Europe. At my company, we are actively pursuing investments in applications that we can potentially acquire and technology platforms that can be added to our O&O properties.
That said, a smart strategy for CIOs looking to follow Buffett’s advice is to capitalize on this trend. Get out there and get involved in the areas where the tech exodus from Eastern Europe is taking away talent and entrepreneurs. This is where you might find the next big thing.
The information provided here is not investment, tax or financial advice. You should consult a licensed professional for advice regarding your specific situation.