Discussing the changes that 2020 has brought to the corporate venture capital space, Joel Albarella, head of New York Life Ventures, recently shared his latest perspectives on what this year’s quickly evolving landscape has meant for venture capital overall and New York Life Ventures specifically.
How is the COVID-19 pandemic impacting strategy?
In response to the far-reaching implications of COVID-19, venture capitalists, corporate venture capital teams, and corporate innovation units are revisiting their strategies. Despite the business challenges introduced by the pandemic, New York Life Ventures continues to fulfill its mission by supporting its existing portfolio, screening and introducing startups internally, and continuously interacting with the venture ecosystem (albeit virtually). The team has not only maintained our proof of concept pace, but also recently required just 48 hours to socialize, launch a proof of concept, and implement with New York Life’s Center for Data Science and Artificial Intelligence – the team’s fastest socialization-to-implementation cycle to date.
How are startups being affected by the economic downturn and pandemic?
We certainly expect there to be impacts, even though it’s too soon to know the full ramifications of these events. We realize that much is dependent on the shape and length of the economic recovery.
Proactive start-ups are revisiting and revising business plans and focusing on capital efficiency and “runway extension” which means extending the time until another funding round by balancing money raised with income and expenses.
Of course, there is a positive aspect to periods of dislocation and change for start-ups since they possess the requisite agility to respond quickly to shifting consumer preferences and market dynamics. And, increasingly, many such start-ups are focused on enabling established insurers in better ways.
Specific to our portfolio, we’re pleased with what we’re seeing and remain cautiously optimistic given our portfolio’s relatively strong financial footing. In fact, we even recently experienced another exit when portfolio company Vlocity was acquired by Salesforce.
How is the team responding to an environment where in-person meetings are not possible? Are new investments happening?
The switch to 100 percent virtual meetings has certainly been an adjustment, but not a major one. Over the last several years, we have conducted a large portion of our introduction and diligence meetings virtually, so this is nothing new for us. Our deep and trusted network is also a strong asset for us as we continue to lean into virtual forms of engagement.
Within our team, we have maintained our culture of connectedness and collaboration by embracing the virtual environment and leveraging tools and technology.
As for new deal flow, the impact of the pandemic to overall deal flow will play out over time, but we also expect continued capital access for start-ups with solid business models operating in high growth areas like smart enterprise, digital enablement, cyber, and collaboration tech.
And we are working through an active pipeline of new opportunities and have seen our “top-of-funnel” expand. New York Life’s financial strength and long-term orientation put us in a strong position to capitalize through and coming out of downturns.
In times like these, what pressures get put on traditional venture capital firms versus those put on corporate venture capital teams?
First, we have a high level of respect for the venture community and are lucky to consider many industry participants as trusted colleagues and friends. While we can’t speak for all corporate venture capital teams, we remain confident in our model and our well-honed strategic flywheel, the feedback and collaboration loop we’ve built between New York Life Ventures, New York Life business leaders, and our external partners which we employ to deliver high value to New York Life along all points throughout any given market cycle. Said another way, the unlocking of the embedded demand for new technology within a large enterprise is not cyclical.
Our metrics, including proof of concept facilitation, investment performance, and employee engagement and enablement continue to highlight our continued success.
What's on the front burner right now in terms of the internal innovation New York Life Ventures spurs at New York Life?
Much of our work in terms of investments, proof of concepts, and design sprints carry on regardless of the environment and, like New York Life, we too are built for times like these.
There is certainly a heightened focus on sourcing and socializing smart enterprise, digital enablement, and collaboration start-ups.
We continue to call upon and grow our internal and external networks and we’ve embarked on a more concerted effort to nurture cross-functional workstreams.
About New York Life Ventures
Since 2012, New York Life Ventures, the corporate venture capital arm of New York Life, has been tasked with accelerating the company’s pace of innovation through testing and investing in emerging startup technologies. Through facilitating proof of concept tests at a rate of one every 2.5 weeks, New York Life Ventures has enabled the company’s business leaders to explore the viability of startups’ business ideas and technologies within New York Life’s ecosystem. New York Life Ventures’ long-term commitment to strategic discovery, relationships, and testing has supported New York Life’s ability to adapt with agility.
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