Title - “Why is the Corporate Venture growing so fast? What are the keys?”
Author - Jean-François Caillard, https://about.me/jfcaillard
Source - https://medium.com/@jfcaillard/why-is-the-corporate-venture-growing-so-fast-what-are-the-keys-b7cab8156b5e
TL;DR - CVC funds have rapidly increased in number and size over the last few years and most of them invest in startups for strategic reasons besides financial returns.
Helpfulness - 4
Tags - corporate venture capital, CVC, CVC funds, startup investing
Questions answered:
- Why do many corporations invest in startups?
- How significant is the role of CVC funds in startup investing today?
- What competitive advantages do CVC funds have against conventional VCs?
Summary:
- Over a thousand major companies worldwide have launched a corporate venture capital (CVC) fund.
- CVC funds have rapidly increased in number and size over the last few years.
- In the US, CVC funds have supplied around 20% of the total amounts invested in startups.
- Globally, CVC funds invested around $83.5 billion in 2016 (about 100% increase from 2014)
- CVC funds’ share of financing currently represents around $25.8 billion (article written in 2017)
- Most CVC funds invest in startups for strategic reasons (not just to get returns)
- Strategic objectives generally observed:
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- Identifying/financially supporting innovative startups that can bring innovation to the company (economic intelligence)
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- Taking positions to better steer their approach to subsequent acquisitions
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- Supporting the company’s small business partners
- CVC funds’ competitive advantages:
- They know their business/industry very well, have in-house expertise and access to market information that is not public
- They can even bring markets to their portfolio startups.
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