Corporate Venturing: time to get serious?

SHIFT NYC 2016

A wealth of useful insights on the consolidation of the VC industry and the rise and maturing of Corporate Venturing in this post summarising SHIFT: Accelerating Corporate and Venture Partnerships, a meeting of the best venture investors’ minds in New York City at the end of October. What resonated with me most was support for some of the challenges we see when helping Corporates to craft Innovation Strategy and improve their innovation performance, namely:

  1. CVC’s are often created in hope by Boards as a frustrated reaction to consistent underwhelming internal innovation performance (a fashionable “me-too”strategy” as we call it),

  2. Too often the prevailing corporate culture is layered onto the CVC bureaucratising  and slowing investment decision, effectively killing the initiative as it is not able to compete with more focused and nimble VC’s, or experienced CVC’s,

  3. Given the above (and other factors), it is unlikely the stand-alone financial return of a CVC’s portfolio makes it worthwhile,

  4. Gaining strategic business knowledge and channelling this to the right parts of the business can make the difference but there is often resistance internally, and this is rarely the focus or done well e.g. giving access to internal decision-makers is one of the best things a CVC can do for its portfolio companies,

  5. CVC’s are usually ‘stand-alone’ and do not have strategic business goals as an objective and are typically not staffed or enabled to do so.

Corporate Boards need to get more focused and join-up and align their internal & external innovation investments and this includes CVC’s, too many of which are heading nowhere or not enabling the strategic business goals of the enterprise. Internal innovation is not easy (and too often underwhelming) but to think that challenge can be avoided by simply  investing externally via a CVC is naive. Both internal & external innovation investments have their roles and value but they need to work together to achieve strategic business goals and as a part of  a corporate Innovation Strategy. Corporate Venturing portfolio companies can be a catalyst to spur internal innovation and evolve culture but it’s not easy and needs constant focus and care, difficult to achieve if CVC’s remain stand-alone activities. It is being done by some, there is no excuse not to try!

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