Speaking to AOP’s Product Development Committee last month, Reed Elsevier Ventures
General Partner Kevin Brown explained how a venture capital division became a fixture of a global publisher, making big returns as well as shoring up its digital strategy.
In the first Internet boom of the late 1990s Reed Elsevier had tried various ways of keeping on top of technological change – from acquisitions, to hiring specialists, and even becoming a limited partner in a fund – all with mixed results – so it retreated somewhat and resorted to using large technology vendors & consultants with information ‘2-5 years out of date’.
With Reed Elsevier Ventures (REV), it launched a venture fund in late 2000 that sits alongside the parent company and advises it on keeping on top of digital media & technology trends.
VCs’ activities can generally be put into 3 buckets: 1.
Finding/transacting new deals
Looking after its portfolio
Since REV doesn’t have to do the third, that time is spent advising its parent & providing a link from the large public media company to the early stage technology ecosystem. REV Investments
So far REV has made 26 investments of $1-10m each – 2 in the UK, 2 in Israel – the rest in the US, predominantly in Silicon Valley.
REV’s proximity to Reed Elsevier has thrown up unexpected benefits for the publisher – for example, allowing Lexis Nexis to partner with REV investment Netli
to address online delivery issues, becoming one of its biggest customers, beforethe start up achieved a very successful exit to Akamai..
Other investments include technology research disruptor GigaOm
, Big Data analytics firm Palantir
(a ‘runaway success’ and now one of the world’s most valuable technology start ups), and translation technology provider Babylon
(150m downloads, 60m daily active users), as well as Seedcamp
– ‘to get a better view on early stage European companies’.
‘It’s hard to do VC well in a public firm – it tends to only happens in private companies’ but REV succeeds because of a long-term commitment from its parent, which leaves it to run more or less autonomously.
In terms of corporates and VC – ‘you have to be clear what you want from the start’ - large public companies usually go wrong by making ‘big swinging bets in areas they don’t understand.’
From a VC’s perspective media & publishing are unique – ‘The biggest winners of the last decade haven’t been the incumbents – that’s why it’s so scary.
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, for more stories of publisher innovation.