A strategic CVC prioritizes investments that directly support the growth of the parent. For example, Henkel Ventures is upfront about its focus on strategic rather than financial investments.
This approach works well for startups that require a longer-term perspective.
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Finally, some CVCs are in transition between a strategic, financial, and/or a hybrid approach. As the entire investor landscape continues to grow and evolve, it’s important for entrepreneurs to be on the lookout for these in-transition CVCs and ensure that they’re aware of how the potential inves...
Ultimately, the people are the most important component of any potential deal. Before moving forward with a CVC investor, make sure you have a chance to speak with key executives from both the CVC and the parent company, in order to understand their vision and culture.
It can also be helpf...
Entrepreneurs should start by speaking with employees at the parent company to learn more about the CVC’s internal reputation, its connectedness within the parent organization, and the KPIs or expectations that the parent has for its venture arm.
An outfit with KPIs that demand frequent kn...
The third type of CVC takes a hybrid approach, prioritizing financial returns while still adding substantial strategic value to their portfolio companies. Hybrid CVCs often maintain looser connections with their parent companies to enable faster, financially-driven decision-making, but they still...
As CVCs become more and more prevalent, entrepreneurs are likely to be faced with a growing number of corporate funding opportunities alongside traditional options. These investors can bring substantial value in the form of resources and support — but not every CVC will be the right fit for every...
In the first half of 2021 alone, Corporate Venture Capital funds (CVCs) around the world inked more than 2,000 deals worth more than $70 billion. It’s an increasingly prevalent alternative to traditional funding options such as VCs and angel investors — but how can entrepreneurs ...
Once you’ve determined the CVC’s place within its larger organization, it’s important to delve into the unique structure and expectations of the CVC itself.
Is it independent in its decision-making, or tightly linked to the corporate parent, perhaps operating under the umbrella of a co...
Traditionally, startups have looked to three primary sources for funding: venture capital firms (VCs), angel investors, and family offices. But in recent years, a fourth option has grown increasingly popular: corporate venture capital funds, or CVCs. Between 2010 and 2020, the number of CVCs grew...
Financial CVCs are explicitly driven by maximizing the returns on their investments. These funds typically operate much more independently from their parent companies, and their investment decisions prioritize financial returns rather than strategic alignment.
Financial CVCs still offer so...
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