Corporate Innovation Outposts in Silicon Valley – 2023 Report Update
The flow of large corporates setting their own innovation outpost in Silicon Valley is in continued acceleration.
And so are the models and methodologies used by such units.
While is undoubtful that the pandemic and economic uncertainty have had some effects on the medium term commitment of such outposts (we do have counted a few “retreats” as a result of budget cuts), for the most part data shows that both the number and the size of such units are experiencing a steady growth.
Four out of five corporates that we tracked were not present in Silicon Valley before 2010. This is particularly evident in the increased presence of corporates from the APAC region, today representing a staggering 40% of the total of outposts we tracked.
Japan and China in particular but also India, South Korea and Taiwan have a significant presence in Silicon Valley.
The other underlying trend that we are tracking is the increased buy-in of innovation related strategies from top-management. Having a well defined strategy on innovation has escalated the priorities of the top management of major corporations.
This has in turn increased budgets dedicated to those units, a trend that is evident both for the amount of capital dedicated to CVCs (Corporate Venture Capital) and the average size of the outpost/innovation units.
It has also stimulated the appetite from some of the top management consulting companies that in the last few years have stepped up in their “innovation-related” offering.
Lastly, we are noticing an increased rate of sophistication in the models that corporates are testing to produce measurable results. It’s not only the “plain vanilla” CVC or R&D centers, but a wide range of options where Venture Building and new Product Labs are becoming more prominent.