A driving force behind the rise of corporate venturing, Claudia Fan Munce is one of the industry’s key influencers. Ms. Munce was a founding member of the IBM Venture Capital Group when it launched in 2000 and its Managing Director since 2004. Having recently departed IBM to join New Enterprise Associates as a Venture Advisor, Ms. Munce shares her experience of building and leading one of corporate venturing’s most successful teams.
When you were building the team at IBM Ventures, what kind of background did you look for in new hires?
In the past, we primarily brought people from inside IBM because every member of the team needed to be someone who understood the corporate strategy and had good credibility. So I recruited a team from strategic positions within IBM – people who had a very deep knowledge. The complexity of the corporation and our portfolio is not something that someone can learn overnight. This is why I tended to recruit from internal sources – because these individuals could help synthesize what they saw externally – the VCs, the investments, the start up companies, the global innovation trends – and make it relevant to IBM.
However, in the last few years I was recruiting primarily from outside the company. The landscape is shifting so fast and all the models are being renewed so I took the decision to recruit from the venture community – including with my own successor. We had reached a stage where we already had a team in place that knew exactly how to navigate IBM and we already had very high credibility inside the company, so I wanted to bring in people from the venture community that had a fresh eye on corporate venturing in terms of collaboration with the financial venture and the entrepreneurial ecosystem.
Were you apprehensive about how these external hires would adapt to corporate life?
I was more excited about the fact that these people would come in with a very deep knowledge of how to work with the entrepreneurs and the institutional ventures, yet they would have this tremendous support structure that I had already put in place inside IBM Ventures. I knew they would really help us innovate in terms of our engagement model and our investment model.
How challenging was it to find the right people?
I actually found an incredible set of candidates in the venture community. The macro-economic helped and there was a lot of available talent because the returns were no longer measuring up to historical levels, so these people were considering doing something different.
The rise of corporate venturing means that there is also an emerging pipeline of CVC talent. So I was tapping into the corporate venture pipeline and all the leaders that I respected in terms of identifying my own replacement.
Where was the IBM Ventures team based?
Today, the whole team is in the Bay Area. Prior to 2008, I was placing people all over the world – 41 countries at one point. But after 2008 the venture centre of gravity shifted back to Silicon Valley – the money has re-concentrated back here and we find that most people make frequent stops – and so I began progressively eliminating our other locations.
With the team all based on the West Coast, how did you handle overseas investments?
The venture team is at the front line in terms of identifying a company. We know when the strategy aligns to what the company is doing or what the venture firm is doing (we’re also LP to many global venture firms). But the actual business development in terms of driving these companies into a potential partnership and vetting them as part of the potential acquisition pipeline – that is very often done in partnership with the local IBM teams and business units.
How did you attract people to work for IBM Ventures?
Internally, this was never a problem. If you’re passionate about innovation, new technology, learning new things and meeting new people – there is no question that this is one of the best jobs. Recruiting internally was never a challenge because everybody wanted to work here – at the very least as a developmental opportunity so that they could rub shoulders with the VCs and sit down with the start-up companies to learn about what they do.
The real challenge is filtering out those who can do it versus those who are just excited about doing it.
How much of an issue is compensation and incentives when it comes to attracting and retaining talent?
I think it is a misconception that the VCs make more money in average than corporate executives. Of course, they made more money in a good year but there hasn’t been that many good years. The financial incentives in corporate venturing – just the standardized corporate executive package – is pretty good for any venture capitalist if you come in at the right level.
What makes a successful corporate venturing team?
One of the key profiles I looked for is the ability to work well in teams. Ultimately, this is a people business. It’s not about the deal, it’s not about the technology – it’s about who you have an affinity with, who you trust, who will be an addition and not a distraction.
Personally, I believe that culture is a key success factor and have tried to hire people who are able to view deals as a reciprocal relationship rather than a transaction. That is something that has really helped me – to think about what value I can give, not just what value I can get. One of the things I’m most proud of in my tenure at IBM is the strong relationships I have built in this community.
This interview was conducted as part of Intramezzo’s 2016 study on Corporate Venture Capital & Talent. You can access the full report here.