Corporate Venture Capital, also known as corporate venturing, is the practice of investing corporate funds directly into external startup companies. Generally, this investment is made by large established companies. The size of the investment is small and the choice is innovative startup companies.
Corporate Venture Capital investment is made through the acquisition of equity stakes in innovative early stage organizations and the signing of joint venture agreements. Leading investors of the CVC firm might also provide the startup with marketing expertise, and strategic guidance on how to operate and scale the company. This type of investment is different from that done by venture capital companies in London.
Objectives of Corporate Venture Capital
The primary objective of corporate venture capital (CVC) is to attain access over recently established, innovative companies which can become strong competitors in the future. CVCs are most popular in the technology sector, but its demand has also increased in the industries of telecommunication, financial services, biotechnology and healthcare.
A secondary objective of corporate venture capital is to help achieve long term corporate goals both financially through increased sales and profits in the long term through product innovation and strategically through shared IP ownership, strategic partnerships and access to talent. We only support clients in making deals when we realize that it is needed. We guide brands on the kind of investment they must seek as per the nature of their business, their requirements, and their vision.
Pivot Digital Ventures has expertise in investor relations and ensures that clients connect with the right investors and corporate venture capital funds for their investment.
How does CVC benefit startups?
When a large company invests in a startup, the startup gets to benefit from its expertise, prestigious name, network of connections, and stable financial standing. A partnership might also be formulated between the CVC fund and its parent firm. The end result of such a partnership is often a boost in the startups valuation.
Corporate venture capital funds in London often invest in companies to acquire smaller, innovative startups. This makes it easier for large companies to maintain their hold on the market and not worry about startups stealing their scene. The chances of pioneering giants being overtaken are eliminated as smaller sized companies are acquired. One of the biggest examples of such an investment is Facebook’s acquisitions of WhatsApp and Instagram.
We strategically identify the right startups that you can acquire and help you negotiate the terms and conditions. We perform a thorough analysis of the market, investment opportunities available and then help the corporation to structure the deal. We also help startups attract corporate venture capital investment.