Cisco this week stepped deeper into the venture capital world by announcing Decibel, an early-stage investment firm that will focus on bringing enterprise-oriented startups to market.
Veteran VC groundbreaker and former general partner at New Enterprise Associates Jon Sakoda will lead Decibel. Sakoda had been with NEA since 2006 and focused on startup investments in software and Internet companies.
“Decibel combines the speed, agility, and independent risk-taking traditionally found in the best VC firms, while offering differentiated access to the scale, entrepreneurial talent, and deep customer relationships found in one of the largest tech companies in the world,” Sakoda said. “This approach is an industry first and provides a unique way for entrepreneurs to get access to unparalleled resources at a time and stage when they need it most.”
“As one of the most prolific strategic venture capitalists in the world, Cisco already has a view into future technologies shaping our markets through our rich portfolio of companies,” wrote Rob Salvagno, vice president of Corporate Development and Cisco Investments in a blog about Decibel. “But we realized we could do even more by engaging with the startup community earlier in its lifecycle.”
Indeed Cisco already has an investment arm, Cisco Investments, that focuses on later stage startups, the company says. Cisco said this arm invests US$200 million to US$300 million annually, and it will continue its charter of investing and partnering with best-in-class companies in core and adjacent markets.
Cisco didn’t talk about how much money would be involved in Decibel, but according to a CNBC report, Cisco is setting up Decibel as an independent firm with a separate pool of cash, an unusual model for corporate investors. The fund hasn’t closed yet, but a Securities and Exchange Commission filing from October indicated that Sakoda was setting out to raise US$500 million, CNBC wrote.
Decibel does plan to invest anywhere from US$5 million – US$15 million in each start up in their portfolio, Cisco says.
“Cisco has a culture of leveraging both internal and external innovation – accelerating our rich internal development capabilities by our ability to also partner, invest and acquire, Salvagno said.
He said the company recognizes that significant innovation happens outside of the walls of Cisco. Cisco has acquired more than 200 companies, accounting for more than one in eight Cisco employees have joined as a result. "We have a deep bench of acquired founders, many of which play leadership roles within the company today, which continues to reinforce this entrepreneurial spirit," Salvagno said.