Edge Computing Corporate Venture Capital Investment Scouting

The corporate venture capital team at a Chinese Fortune 500 IT hardware manufacturer saw an opportunity to improve the company’s industrial solutions by making strategic investments in edge computing startups.
The IT hardware manufacturer recognized growing demand for edge computing solutions to support the upgrading of China’s industrial infrastructure. However, their existing product portfolio focused on servers, gateways, and other IT infrastructure. They lacked a competitive portfolio of vertical applications that address the needs of operations teams. They saw an opportunity to grow their portfolio by investing in North American and European edge computing startups and bringing their solutions to China. This would provide competitive differentiation from other infrastructure suppliers and enable them to package their core hardware portfolio with applications delivered by technology startup partners. The approach would rapidly accelerate their time to market and provide more flexibility than internal technology development.
Asia Growth Partners began by mapping the North American and European edge computing vendor ecosystems in order to understand trends in technology development and use case adoption. Startups within the investment scope were then prioritized for a deeper assessment of technical capabilities, applications, business scale, and business models. We used a balanced scorecard approach to determine which companies fit best with the client’s investment plans and strategic collaboration goals. Detailed briefs of these companies were provided to the corporate venture team to initiate the due diligence process.
  • Map the edge computing market, key technology domains, and application landscape.
  • Build a long list of all potential investment targets in scope.
  • Prioritize a shortlist of startups for initial technical and business due diligence.
  • Recommend startups for the corporate venture team to initiate conversations with.
  • The initial scan of edge computing investment opportunities yielded a list of 105 startups with solutions in the target technology domains and an estimated valuation of $30-100 million.
  • After shortlisting startups for deeper investigation, 12 companies were prioritized by the client for preliminary due diligence. Detailed briefs were developed for these 12 startups, covering portfolios, intellectual property, market traction, and management teams.
  • Out of the 12 companies prioritized for due diligence, 7 were recommended for engagement by the corporate venture team. Management meetings were scheduled to initiate investment and partnership discussions. The supporting edge computing market analysis was also presented to the client’s senior management team to educate them about market adoption trends and the role of solution partners in their portfolio.

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