Corporate VCs looking to invest

Corporate venture capital (CVC) is a type of venture capital that is invested in by corporations instead of traditional venture capital firms or individual investors. CVCs invest in startups and early-stage companies that align with their strategic goals and provide them with financial and strategic benefits.

Pros of receiving investment from a CVC

• Access to the parent company's resources, including distribution channels, manufacturing capabilities, and technology expertise.
• Opportunities for strategic partnerships and collaborations with the parent company.
• Stronger validation of the startup's product or service, as the parent company's investment serves as an endorsement.
• Long-term stability and commitment from the parent company.

Cons of receiving investment from a CVC

• Potential conflicts of interest between the parent company's strategic goals and the startup's interests.
• Less focus on financial returns and more emphasis on strategic goals and synergies.
• Potentially longer decision-making processes, as the investment decision may need to be approved by multiple levels of management.
• Less experience in managing venture capital investments compared to traditional venture capital firms.

Motivations of CVCs

• Access to new technologies and markets that align with the parent company's strategic goals.
• Opportunities for strategic partnerships and collaborations with startups.
• Potential for financial returns through successful exits or acquisitions.
• Enhancement of the parent company's reputation and innovation capabilities.

How are CVCs Managed?

CVCs are managed by the parent company's executive team and are typically operated by a dedicated investment team. This team may consist of professionals with venture capital experience, industry expertise, and technical knowledge. CVCs often have their own investment thesis and guidelines that align with the parent company's strategic goals.

What Do CVCs Invest In?

CVCs invest in startups and early-stage companies that align with the parent company's strategic goals. This may include companies in related industries, companies with complementary technologies or products, or companies that can help the parent company enter new markets.

What to Expect if a CVC is in Your Cap Table

• Access to the parent company's resources and expertise.
• Potential for strategic partnerships and collaborations with the parent company.
• Increased scrutiny from the parent company on the startup's performance and alignment with the parent company's goals.
• Potential conflicts of interest that may arise if the parent company's goals diverge from the startup's interests.

Success Cases and Statistics

Corporate VCs have played a role in some high-profile startup success stories. For example, Google Ventures (GV) was an early investor in Uber, and Intel Capital has invested in companies such as Dropbox and DocuSign. According to Pitchbook, corporate VC investment reached $74.2 billion in 2020, accounting for 27% of total global VC investment. Some of the most active corporate VCs include:

• Google Ventures, the CVC arm of Google, has invested in numerous successful startups, including Uber, Nest, and Slack.
• Salesforce Venturesinvested in several unicorns, like Airtable, Algolia, Auth0, Contentful, DocuSign, Dropbox, Snowflake, Stripe, Twilio, Zoom.
• Hubspot Ventures is another active corporate VC with PandaDoc, Pipe, Aircall, ClickUp, Jasper in their portfolio.