Venture capital group goes corporate

After setting up Eastman Chemical’s corporate venture capital unit in 1999, Mark Klopp had a hard time getting cut into deals alongside traditional Silicon Valley firms.

After setting up Eastman Chemical’s corporate venture capital unit in 1999, Mark Klopp had a hard time getting cut into deals alongside traditional Silicon Valley firms. Eastman Chemical -- like other corporations then eyeing early-stage technology deals -- wasn’t a member of the venture investing club, and Klopp simply didn’t know the ropes. “First, I had to explain that we were not part of Eastman Kodak,” recalls the 42-year-old Klopp, noting that Kodak had spun off the Kingsport, Tennessee, chemicals unit in 1994. “There was nowhere to learn how to do corporate VC. There was no professional organization. It wasn’t institutionalized.”

Now the managing director of Danville, Californiabased Eastman Ventures is working to fill that institutional void. Last month he became chairman of the National Venture Capital Association’s newly formed Corporate Venture Group, which aims to bring corporate players closer to the mainstream independent firms that dominate deal flow. Explains Klopp: “The common theme is, We’re all in this to use VC as a means to innovate and grow our corporations. We can learn a lot and co-invest, even.”

Corporate venture outfits can use the help: Their investments have fallen from $16.9 billion in 2000 to $1.1 billion in 2003. Klopp believes that companies are too quick to bail out of venture investments and reassign their portfolio managers when times are tough. The Corporate Venture Group has some 40 charter members, all from the NVCA’s rolls, including Boeing, Intel Capital and In-Q-Tel, the CIA’s venture arm.

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