Salesforce.com will devote a new $50 million investment fund to startups and create an incubator for early-stage cloud startups, Chief Executive Marc Benioff said.
The dual move is the sales-software provider’s latest push to foster an ecosystem of applications that run on its cloud-computing platform.
“We’ll give you real estate, money and support,” Mr. Benioff said Tuesday, speaking at the company’s developer conference here. The incubator will be housed in its San Mateo, Calif., offices.
Salesforce is one of the most active corporate venture investors in software that helps run large companies, and its investments have increased significantly in the past couple of years.
As of January 31, Salesforce had invested $504.5 million, compared with $158 million a year earlier, according to company filings. The increase was due, in part, to the creation of a $100 million fund to invest in European startups.
Salesforce has invested in companies since 2009. It founded Salesforce Ventures in September 2014, John Somorjai, executive vice president of corporate development and Salesforce Ventures told CIO Journal in January.
Salesforce Ventures is the only corporate venture fund invested 100% in enterprise cloud computing, he said.
Salesforce’s new fund, called the Lightning Fund after the company’s software development platform, comes as startups are having a more difficult time finding funding and private-company valuations are cooling. The company’s investments have fared relatively well in this regard. It estimates the fair value of its investments at $706.9 million as of April 30, compared with $714.1 million as of January 31.
Over all, corporate venture groups invested over $7.5 billion in 905 deals to high-growth startups in 2015, accounting for 13% of venture-capital dollars invested that year and 21% of deals, according to a recent report by Price water house Coopers and the National Venture Capital Association.
Corporate venture investments have been hurt in the past when markets fell sharply. That happened after 2000, when such funding hit a peak of $15.1 billion invested in 1,948 deals, according to the National Venture Capital Association. During the first three months of 2001, investments fell 81%, and by the end of that year, 45% of the corporate venture funds that existed in 2000 had shut down, according to work published by Professor David Garvin at Harvard Business School.
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