What is Corporate Venture Capital?
Corporate Venture Capital (CVC) is used by companies to make investments in external start-ups. In addition to the traditional venture capital goal of generating financial returns across a portfolio of investments, companies often pursue CVC investments for strategic reasons, such as gaining access to new technologies, exploring new business models, or entering new markets. In return, the start-up may benefit not only from financial resources but also from gaining access to the investing firm’s channels, customers, and expertise. CVC can also use minority investments as a path to future acquisitions.
Usage and satisfaction among survey respondents
How Is Corporate Venture Capital Implemented?
Successful corporate venture investments require managers to:
- Define a clear vision and investment strategy
- Evaluate and target start-ups based on the level of synergy and the ability of the firms to work together
- Establish an efficient approval process to act quickly on investment opportunities
- Create an experimental, risk-tolerant mindset
- Establish processes to share knowledge
What Are Common Uses of Corporate Venture Capital?
Some common uses of Corporate Venture Capital include:
- Learning about early-stage disruptive business models in core or adjacent markets
- Gaining access to new technology, products, or services
- Creating options for future acquisitions
- Growing products, technologies, or services that increase demand for core businesses
- Investing resources and expertise in another company to generate financial returns
Management Tools & Trends 2023
On the 30th anniversary of our survey, managers seem surprisingly upbeat.