ComfortDelGro’s venture arm may need fuller autonomy if it is to live up to its potential

THE investment last week by transport operator ComfortDelGro Corporation (Comfort) into teleoperation company Ottopia marks the first by Comfort’s venture capital arm ComfortDelGro Ventures (CDG Ventures) in nearly four years. Investors may be wondering why it had taken the company this long to find another suitable target.

The answer may lie in CDG Ventures’ structure.

CDG Ventures was set up in 2019 with US$100 million. Since then, it has announced three other investments: in logistics startup Haulio, on-demand mobility startup Swat, and autonomous vehicle safety startup Foretellix. It has also put S$30 million towards an Autonomous Vehicle Centre of Excellence, and invested four million euros (S$5.7 million) into sustainable mobility venture capital fund Shift4Good.

On Jan 11, CDG Ventures announced a US$4 million investment into Ottopia. The latter makes software that enables remote vehicle assistance for autonomous vehicles, which is in keeping with the theme of CDG Ventures’ other investments. Yet, there is room for CDG Ventures to do more to support its parent.

Most corporate venture funds have two strategic purposes: learn about new business models and technology, and/or find a return on investment.

The first strategy is akin to a corporate paying tuition fees to explore and understand new technology and business models. Such a strategy often involves investing in early-stage startups that might not have revenue or customers.

The second strategy tends to see corporates taking stakes in late-stage or pre-IPO startups with the intention of exiting the investment with a tidy profit.

Learning the ropes

Regardless of strategy, however, CDG Ventures’ pace of investments is unusual.

To give an example, listed peer ST Engineering’s corporate venture fund, which started out in 2017 with US$150 million in capital, has already made investments in 10 startups. This works out to a rate of roughly two startup investments a year.

Then there is CDG Ventures’ investment into Shift4Good. Most corporate venture funds make investments as silent limited partners (LPs) of venture capital funds at the initial stage of their formation, to get a sense of the deals available on the market. The fund management fees are thought of as the cost of learning the ropes in the venture capital business.

CDG Ventures, however, is only stepping into these waters four years after its formation. In its media release on Jan 25 announcing the Shift4Good investment, Comfort said that it would look at startups identified by the fund and invest in them via the fund or separately.

If CDG Ventures had made this investment earlier, it would by now be seeing deals come its way from marketing itself to the ecosystem over the past three years.

The investments into Haulio and Swat, meanwhile, are just a drop in the bucket of its US$100 million fund size. CDG Ventures put US$1.5 million into Haulio, and US$740,000 into Swat.

The dollar amount put into Foretellix is unknown. But given that CDG Ventures was not leading the US$14 million funding round, it’s not likely to have plonked down the lion’s share.

One potential reason for this slower pace, industry insiders say, is a lack of autonomy. CDG Ventures may be dealing with the corporate inertia from an established business more than some of its other corporate venture peers.

This is because CDG Ventures is parked within Comfort’s corporate strategy team. Other corporate venture funds, such as Singtel’s Innov8 and ST Engineering Ventures, have a separate team and a head with significant autonomy. When Singtel set up Innov8, it also separated the team physically with an office space of its own at one-north.

Much to offer

The amount set aside for the fund is not an insignificant one, and more could probably be accomplished.

Comfort also has much to offer to startups, in terms of data and testbeds to validate their technologies or business models.

An autonomous team for CDG Ventures, with an independent head, could allow the venture capital arm to achieve its full potential.