September 2022
July 6, 2023
July 6, 2023

Missed opportunities — the path not ventured

Tales of unmade CVC investments…

Dealing with missed opportunities is never easy as I’m sure you can relate, whether personal or professional. Working in the venture ecosystem, it is unsurprising that for every deal won, many are lost — par for the course.

But it’s the ‘bounce-back’ and how you grow from missed opportunities that tells a captivating story in my opinion. Inspired by the infamous Bessemer Venture’s anti-portfolio, I decided to dive into our own “missed opportunities” and the lessons learnt that changed the course of Wayra.

For some context, Wayra has been operating in the ecosystem for a decade. As one of the first movers in corporate open innovation, it is safe to say we’ve had some real learning curves, some great wins and hard-hitting lessons.

Investment theses’ act as a north star for any VC/CVC but that’s not to say they are absolute (not when you are in the business of searching for outliers). For Wayra UK, our central investment thesis centres around “Fit” — alignment and opportunity with Telefónica’s brands, units and customers is a primary factor for us before we consider investing.

When assessing a company for investment, our main considerations are:

1. Can they produce a significant ROI commercially for the business?

2. Can we incorporate them into our product portfolio to resell?

3. Can they help shape the future of Telefónica “tech bet”?

4. Can we potentially acquire them?

Sometimes whilst assessing companies we can get lost in the methodology (science) without leaving enough room for the intangible factors (art) — qualities they possess which leads them to become great companies.

So, here’s a few of the companies we considered in the past, but missed the opportunity to invest in!

WhatsApp (need I say more)

The story goes that WhatsApp approached Telefónica for investment way (way) back in the early days, sadly Telefónica was too busy building the now defunct TU Me launched in 2012 in order to compete with Skype. By 2014 Meta (Facebook) acquired WhatsApp and by 2015 they were named the world’s most popular messaging app and completely disrupted SMS revenue streams for Communication Service Providers. Yikes.

CloudKnox acquired by Microsoft

We came across CloudKnox a startup that helps companies manage user permissions in the cloud, in 2019 when they participated in one of our former Cybersecurity programmes in collaboration with GCHQ/NCSC. There was immediate interest within O2, they were on-boarded to O2 Business’ Cybersecurity vendor portfolio and included in the go-to-market material. However, due to a lack of initial traction and focus on the UK market from CloudKnox, the relationship remained fairly dormant. Sadly, as can be the case operating within the corporate labyrinth, momentum was lost, and it fell between the cracks. CloudKnox was recently acquired by Microsoft for an undisclosed sum in July 2021.

Dija acquired by GoPuff

Dija is a company in the food delivery space that delivers your groceries ‘in under 10 minutes’. The founders are seasoned operators in food logistics — ex Deliveroo and JustEat. When we came across this company, we were immediately excited by the potential and expertise of the team. Although I knew it was slightly “left-field”, given we have retail customers like Tesco and our O2 retail stores, I considered it to be a potentially bold strategic move. Before reaching out to the team, we typically like to discuss and brainstorm potential alignment and “fit”, to ensure we don’t waste founders’ time. Charge to Mobile an O2 product that we considered to be a great potential “fit case” for Dija, was unfortunately not the view of our internal stakeholders as they considered it to be slightly out of scope. Dija was acquired by GoPuff their unicorn competitor, a mere 9 months after they were founded.

HERO acquired by Klarna

HERO is a social shopping platform designed to provide consumers with immediately shoppable content produced directly from retailers’ physical stores. We initially introduced HERO to the O2 Stores and the Omnichannel teams during the first COVID lockdown as a potential solution to lost business from store closures. However, the demo didn’t go too well due to connectivity issues. Therefore, it wasn’t overly convincing that it was a solution that could be rolled out as a seamless hassle-free solution during a pandemic. Timing also wasn’t great as the priority early on in the pandemic was people ringing up to discuss their accounts and billings due to employment issues (i.e., being made redundant) so this took priority over a sales conversation. Upon stores reopening, the focus was more on safety and hygiene measures for staff and customers rather than new technologies. HERO was acquired by Klarna for £115M in July 2021.

Hopin — Unicorn status

Hopin is a virtual events platform designed to connect distributed communities. We came across Hopin at a time where we were being reactive to a global pandemic like most. We believed in the future of hybrid events post-pandemic, and as O2 has one of the biggest entertainment venues in the UK — the O2 Arenas — we believed Hopin to be a great “fit” candidate. Due to Hopin being oversubscribed on their round, we had limited time to develop a joint go-to-market strategy that aligns with both Telefonica’s and Hopin’s strategies and priorities. Unfortunately, we were unable to move fast enough to find support before they closed their round, so we had to pass on the deal. Hopin is now worth over $7.75 billion dollars and has been named one of the fastest growing companies ever.

🏁 Conclusion

From a glass half-full perspective, it’s great to know we are looking at the right companies!

With missed opportunities, come great lessons and, occasionally, pivotal moments. Although reflecting on missed opportunities can be bittersweet, extracting the value from lessons learnt has been a fundamental exercise to improving our processes. Thus, ensuring we can capitalise on the best opportunities for Telefónica and scale-ups that come our way.

So, in the spirit of sharing, I’ve summarised a few of the lessons learnt below for corporates trying to work more effectively with start-ups;

💡 Lessons learnt

  • Build vs buy; knowing when to cut your losses (cough TU Me).
  • Ability and willingness to collaborate with start-ups are essential for any meaningful corporate innovation.
  • Sponsorship and advocacy need to be consistent so opportunities are not lost.
  • Traction is usually minimal in the first 6–12 months working with a corporate — it’s all about the long game — it takes time to on-board, productise, train internal teams, external awareness campaigns etc.
  • Be persistent — perseverance is necessary in order to develop conviction in a business case.
  • Timing is everything. HERO came at a time where the business was reacting to a global pandemic and priorities rightfully shifted to supporting customers and not “selling”.

⚡ Pivotal Moments:

  • Telefónica established Wayra across their global footprint to gain more access to start-ups and next-generation technology.
  • Telefónica started making more strategic investments in the Future of Mobile as well as launching new verticals.
  • Whilst “fit” remains central to Wayra’s investment thesis, there is ample latitude for “tech bets” for when we see great potential but there are no short-term opportunities or time to align the business stakeholders.
  • Streamlined Investment Committee with faster decision making to afford more agility in making investment decisions.

Related Articles

Telefónica uses first and third-party cookies for analytical, personalization purposes and for advertising based on a profile of your browsing habits (for example, pages visited). You can accept all cookies by clicking "Accept all and continue". You can configure or reject their use by clicking "Configure / Reject cookies". For more detailed information, see our Cookies Policy