MIT Sloan Management Review Article on Making Corporate Venture Capital Work

  • 4m
  • Michael Wade, Nikolaus Obwegeser, Patrick Flesner
  • MIT Sloan Management Review
  • 2019

The potential synergy from pairing corporations with new ventures is promising, but many CVC plans fail to deliver value.

Corporate venture capital (CVC) — equity investments in startups made by corporate entities — is steadily rising in the market. In 2018, the number of active CVC business units rose to 773, a 35% increase over the previous year. These CVC units participated in 32% more deals and invested 47% more funding over the same period. While technology giants like Google, Intel, and Salesforce were the most active investors, CVC units have been established by corporations across the globe in many industries beyond tech. Johnson & Johnson, Mitsubishi, Robert Bosch, Unilever, Novartis, and Airbus are just a sample of corporations that recently established CVC activities.

As CVC researchers and practitioners, we’ve studied hundreds of CVC operations and deals across the world to identify a portfolio of better and worse practices. In theory, CVC provides a win-win for both established corporations and startups. In addition to capital, startups gain access to valuable corporate resources, industry know-how, advice, and, perhaps most important, contacts and sales leads. For corporations, the benefits include the possibility of above-average financial returns connected with any venture capital investment, and strategic benefits such as access to new technologies or insights that may otherwise be unavailable.

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  • MIT Sloan Management Review Article on Making Corporate Venture Capital Work