Corporate Venture Capital (CVC)
Companies creates a fund and invests directly in external startup companies, including in those startups that the company has spun off as an independent business.
It needs a discerning set-of-eyes and two-eyed principle, one internal and another external, to understand why certain types of CVC investments proliferate only when financial returns are high, why other types persist in good times and in bad, and why still others make little sense in any phase of the business cycle.
CVC investments need periodic portfolio assessment in an unbiased manner, apart from evaluating potential CVC investment candidates that are aligned to the strategic vision of the organization.
Open2Innovation brings framework from the industry’s best practices and cross-pollinated ideas for optimum leverage from CVC funds. Leverage is financial and beyond. Open2Innovation can also represent on the CVC board, for an experienced, unbiased, external, industry-oriented viewpoint.
Key Challenges faced by CVC
- Corporate-Startup handshaking is difficult, due to the corporate processes that are made for established companies. It takes long time and many approvals to overcome the hitch of working with startups.
- Key perennial thought that nags the corporate leader, what if the startup folds up after CVC has invested in it. How to extricate from the situation without burning?
- Coming up with the right valuation, at which to invest or co-invest, has no easy answers.
- Corporate monitoring process is heavy. How can effective monitoring be combined with light touch involvement?
- Investing due to new technology, needs evaluation from the domain experts. Without internal availability of such experts, who to depend upon for unbiased inputs, to aid in the decision making?
Open2Innovation can help you find answers to these and other similar concerns.
We shall be happy to answer, engage and work together with you. Have queries?