CoverReport-Innovation in Silicon Valley
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 (with APAC region strengthening its presence)

San Francisco (CA), Sept. 29, 2020 – In Silicon Valley both the number and the size of innovation outposts are experiencing a steady growth despite COVID-19, according to a new Report by Mind the Bridge, presented today during the LIVE Opening of the Digital Scaleup Summit Silicon Valley 2020.

“Before the year 2000, there were only 29 innovation outposts active in the Bay Area, with most of them as R&D centers – commented Marco Marinucci, CEO and founder of Mind the Bridge – 20 years later the picture is substantially different, with corporate innovation activities booming, becoming a central element of the innovation ecosystem. Over the last 10 years, the number of corporate innovation outposts have increased more than 5 times. 80% were not present before 2010.”

In total, the Report tracked 391 outposts from 319 different companies, 55 (one out of five) with multiple presences and 264 with just one outpost. Alongside the “classical” R&D center type, corporates have been establishing a wider breadth of operations, shifting toward a leaner presence and promoting the use of open innovation mechanisms. Innovation Antenna and Labs, having only a modest presence before 2010, have now become front and center of the strategies adopted by corporates looking to establish their presence in the Bay Area.

“The types of outposts that the corporates choose to set up is always directly related to the measurable goals of their strategy when it comes to innovation. Our analysis has found that 55 international corporates have established multiple outposts to complement their investment strategy with a larger breadth of open-innovation activities – added  Alberto Onetti, Chairman of Mind the Bridge – Today CVC offices represent the preferred vehicle by corporates to tap into the Silicon Valley innovation landscape with 123 outposts showing a growing appetite for directly investing in mature startups thriving in the innovation ecosystem.106 are R&D Centers, while 73 by Corporate Innovation Antennas and 89 are Corporate Innovation Labs. Among the latter we noticed an increasing sophistication and hybridization of the model, evolving from traditional accelerators towards venture builders and startup studios.” 

The largest share (135, 42%) of the total outposts is represented by the APAC countries. North America (94 companies, 29%), Europe (82 companies, 26%) and Latin America ( 5) follow. When moving to countries, corporates from the United States are the most present (92, 29% of total). Japan follows (first foreign country with 71 companies, equal to 22%) and then we find China, with about half the number of Japan (31, 9.7%) and rapidly climbing the ranking over the last years. Germany (21, 6.6 %) and France (20, 6.3%) lead the European pack, followed by the United Kingdom (14, 4.4%) and Switzerland (9, 2.8%). Following the European group, we find the second tier of countries from APAC with India (8, 2.5%), South Korea (8, 2.5%) and Taiwan (6, 1.8%).

To notice, in particular, that not only Japan registers the largest innovation presence of corporates in the Bay Area but also Japanese CVCs have taken a primary role in the amount of capital invested, participating (solo or with one or more traditional VCs) in 288 deals totaling $28B over the last five years. China has also shown an impressive growth rate for the number and size of investment rounds into the Bay Area participated by large Chinese corporates: $25.6B over 207 deals in the 2015-2019 period. The amount of capital invested in deals participated by South Korean CVCs is small if compared to the other two giants, however while Japan and China have been slowing down over the last five years, South Korean corporates’ investment amount (either solo or alongside other CVCs/VCs) have always increased and almost tripled from $0.31B to $0.88B.

Over 20 different industries have an innovation stronghold in Silicon Valley: the corporates tracked in the Report are most active in Automotive (38, 12%), Finance & Banking (38, 12%) and Electronics (36, 11%). IT & Software (25, 7.8%), Biotech, Life Sciences & Pharma (25, 7.8%) and Telecommunications (24, 7.5%) are also significantly represented.

The large majority of outposts (203) are organized around small and lean teams with less than 10 people, 95 need to have a larger team (11-50 people), 43 require from 51 to 250 employees, 15 need from 251 to 500 while 35 can count on more than 500.

1 out of 4 outposts (97) are currently based in San Francisco, “the City”. 15% (59 outposts) preferred San Jose. Santa Clara follows with 10.5% (41), Palo Alto with 10.2% (40) and Sunnyvale with 8.4% (33). Menlo Park, Mountain View and San Mateo count a smaller presence with 6.1% (24), 4.1% (16) and 2.5% (10), respectively.

The Directory with updated detailed information about all the Corporate Innovation Outposts in Silicon Valley is now accessible on Mind the Bridge’s website, at the link: https://sv-innovation.mindthebridge.com.

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