After a string of eye-catching deals, Singtel Innov8 has emerged as one of the most successful venture capital investors across Asia.
Since its US$250 million (S$350 million) fund started in 2010, it has invested in 56 companies. Of these, nine were acquired and four were publicly listed.
Last month, networking giant Cisco acquired one of Innov8's portfolio companies, Australian Internet of Things start-up Jasper Technologies, for a whopping US$1.4 billion.
Innov8 is Singtel's corporate venture arm. Its other portfolio companies include online streaming video site Viki, which was acquiredby Japanese e-commerce giant Rakuten for US$200 million.
But its most successful was computer networking company Arista Networks, which went public in 2014 on the New York Stock Exchange. Overnight its stock jumped and it was valued at US$3.5 billion.
Start-up and investor research firm Oddup said Innov8's track record as a five-year-old venture capitalist (VC) which has exited more than 30 per cent of its portfolio was impressive.
How much did Innov8 gain?
Neither the telco nor its venture arm disclosed all its investment sums or the amounts invested. Typical deals are between US$3 million and US$5 million. Its biggest was US$20 million, which it has already exited.
Oddup's chief executive James Giancotti estimates that Innov8 is generating on average more than 15 times return on investments.
The cash it generates from these exits is proving more than sufficient for future investments.
Its mandate when it started was to nurture Singapore's start-up ecosystem. It helped launch Block 71, Singapore's first "headquarters" for start-ups, in the Ayer Rajah industrial estate. After that success, two other blocks have been set up there for start-ups.
It extended this concept to the United States, where it launched Block 71 San Francisco which provides a soft landing for local start-ups wanting to expand there. It also provides a window for US start-ups which want to know what is happening in South-east Asia.
As a VC, Innov8 invests in telco and related industries like networking and digital media. This helps to build a telco-related industry in Singapore.
The National Research Foundation (NRF), which provides funding for research and innovation, wants corporations to set up corporate venture arms so that they can grow their own industries too.
The NRF's financial support to a handful of corporate ventures will be unveiled in the next few months. Singtel's record can offer vital clues to other corporate ventures.
Access to customers is crucial for start-up success. Singtel offers start-ups access to its more than 575 million customers in the Asia-Pacific and Africa.
A VC with a parent that has financial heft is also important when it comes to deal-making.
Mr Giancotti said Singtel's strong financial standing is important when US-based start-ups consider investments from Innov8.
A key reason Innov8 invests only in telco and related industries is that they give insights into emerging technologies and new business models which Singtel can use. In this area, Mr Edgar Hardless, Innov8's chief executive, has some advice: "Getting engagements between start-ups and corporate business units is tough. Expectations are different and there must be adjustments on both sides to ensure success."
Corporations also should offer business guidance as start-ups are usually run by first-time entrepreneurs. "Reaching the first 10,000 customers in Singapore may be relatively straightforward. But 100,000 customers calls for good processes and management."
Corporations must also tolerate failure as venture investments do carry risk, he added.
This article was first published on March 2, 2016.
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