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Our corporate venture capital consulting professionals can help your business invest in startups. Find out how.
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Company executives looking to add new capabilities or enter new markets can consider corporate venturing as an option to jump-start innovation. But to get the most out of corporate venture capital (CVC) investment, CEOs and their teams need to understand the leading practices of venture capital, as well as how corporates can leverage their strengths to access relevant deals.
“Traditional” venture capitalists are called institutional investors, financial VCs or simply VCs, while corporate investors are best known as CVCs.
These two types of investors have a lot in common. Both make minority investments of cash in exchange for equity ownership in private companies. Both attempt to provide various forms of operational support to help these companies grow. And, for the majority of investments, both seek a financial return when the start-up is ultimately sold or completes a public stock offering.
In these two variants of venture capital, the fundamental activities and processes are largely the same: (1) source opportunities, (2) perform diligence to evaluate their attractiveness, (3) negotiate and execute transactions, (4) manage the resulting portfolio of investments and (5) guide them through the process of achieving liquidity. Each type of organization also has various stakeholders demanding coordination and communication.
Beyond the above commonalities, these two types of investors can also be very different.