Strategies and Tactics for External Corporate Venturing

Abstract

OVERVIEW:By providing a window on emerging technologies, market opportunities, new business models, and distribution channels, corporate venturing can be an important source of technological innovation for corporations. However, effective implementation requires a clear view of the objectives, dedication to understanding the process, and discipline. There are two major tactics for external investing: invest in a venture capital fund, or invest directly in a start-up company, and the strategy a company chooses should be tied to its objectives. For example, best-of-class companies whose objective is to acquire a window on technology will invest in VC funds to gain access to their wider deal flow. One of the most challenging aspects of corporate venturing is finding the right people, and corporations must be willing to devote significant time and resources to working closely with their portfolio companies if they wish to gain satisfactory value from their external investments.

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