Corporate Venture

Robinson Ventures has decades of experience in helping corporations establish corporate venture functions/funds, most often tied to innovation with the company’s strategic plan. If you are interested in talking to us about what it takes to establish a corporate venture fund, please use the Contact Us Link provided below!

Definition: Corporate venturing – also known as corporate venture capital, is the practice of directly investing corporate funds into external startup companies. This funding is usually done by large capital companies who wish to invest in small, but innovative, startup firms. These companies do so through joint venture (JV) agreements and the acquisition of equity stakes. The investing company may also provide the startup with management and marketing expertise, strategic direction, and/or a line of credit.

There are five modalities of Corporate Venture investing:

1. Early-Stage Financing: Startup companies that can begin operations yet are not at the stage of commercial production and sales; amounts tend to be small or “sweat equity”.
 

2. Seed Capital Funding: Initial capital or money used to cover initial operating expenses and to attract venture capitalists. Amount tends to be small and can be additional “sweat equity."
 

3. Expansion Financing: Capital provided to expanding portfolio companies through launching new products, physical plant expansion, product improvement, or marketing. Amounts tend to be much larger and can involve syndication of the opportunity with other investors.
 

4. Mergers and Acquisitions: This involves financing a startup company’s acquisitions as well as aligning the startup with a complimentary product or business line that will project a similar brand for both companies. The amount is large and can be the corporation with the venture fund.
 

5. Initial Public Offering (IPO): Public offering via a stock market where the Corporate Venture Fund exits the investment and recapitalizes the parent company/fund.

As you can see via the above graphic (credit: Highnote Foundry), a corporate venture function/fund alignment within the company’s culture, board, chief executives, and the operators responsible for the innovation/venture functions. Excellent articles supporting corporate venturing:

• https://hbr.org/2013/10/corporate-venturing

• https://www.ey.com/en_us/growth/why-corporate-venture-capital-programs-are-more-important-than-ever

• https://www.forbes.com/sites/forbesfinancecouncil/2021/07/07/the-three-benefits-of-corporate-venture-capital-and-how-to-choose-the-right-firm

• https://www.bcg.com/publications/2018/how-best-corporate-venturers-keep-getting-better

• https://www.svb.com/trends-insights/reports/state-of-cvc-reports-2021

Finally, as presented by CBINSIGHTS

Regardless of the stage of a company, corporate venture can start at any time. Whether it be in a small but groundbreaking startup, a mature small business, or somewhere in between; there is never a wrong time to start a conversation about corporate venture, reach out to us today!