Is Capital needed for Corporate Venturing to succeed or can Partnerships with new ventures deliver the results enterprises are seeking? Recently I spoke with two CVCs; one was being asked to unwind their group and the other being asked to reduce staff and focus on M&A. I asked how their work was evaluated and what KPIs mattered to their executives. Their responses were identical to what we heard when we were asked to re-think the accelerator model for a corporate client 18 months ago. Below are the 3 shared desired outcomes:
Skate Ahead, Report Back
Call it Disruption Insurance or the search for the next $100M+ growth area, corporate venturing is tasked with being ahead of what’s next and sharing those insights back with the core business and to strategic leadership.
Apply What’s Next, Right Now
Find competitive advantage through new technologies and emerging startups that when applied across the core business unlocks competitive advantage. Importantly, this isn’t academic but rather tangible action through pilots.
The Halo of Innovation
A signal to employees, investors, and customers that the business is innovating, is future-proofed; this also drives employee engagement.
Notice that neither Internal Rate of Return or Unicorn Exits are mentioned. In fact, a C-suite executive told me that even if a startup in their portfolio IPOs, that the windfall would be less than a rounding error on their balance sheet and would take 7-10 years so they would be retired. Make no mistake, I believe in CVC and think strategic investments are a crucial part of the equation for corporates to grow. But the CVCs I know don’t like to deliver insight reports, don’t want to invest in pre-seed startups (most accelerators) and don’t have a dedicated function to commercialize investments inside of their organization. If a CVP function existed to deliver Insights, Pilots and Engagement wouldn’t this increase the effectiveness and focus of CVC and together deliver on corporate goals? Should Capital be the de-facto tool here, or should Corporate Venture Capital evolve to Corporate Venture Partnerships?
Learn More:
Here are a few links where you can learn more about this idea and the companies leading the way in rethinking how they work with startups:
