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March 10, 2023

Corporate Venturing, a form of innovation for companies

Innovating is not always easy, especially when companies already have a certain entity, size and/or trajectory. So it is always said that small and startup companies tend to be more agile, even if they have fewer resources.

So one way to bridge the needs and opportunities of both is to reach some kind of agreement whereby the smaller one continues to lead innovation, but the larger one supports it and benefits from it.

This can be achieved through what is known as Corporate Venturing.

What is Corporate Venturing?

When most people think of "corporate venturing", they think of "startups." It is a strategic investment approach whereby an established company invests in a startup with the aim of gaining short- and long-term benefits, such as access to new technologies, markets or talent.

This corporate venturing can take the form of financial investments, but also in the form of strategic alliances or even the acquisition of the startup company.

However, there is much more than investing in new companies. In fact, there are several types of initiatives of this type that companies can undertake.

In this process, a company assumes risks to create new opportunities. This can be anything from investing in new businesses to developing new products or services. It can therefore be an excellent way for companies to expand their reach and make their business grow.

Advantages and considerations

This system has several advantages. First, it can help companies access new markets and explore new opportunities. It can also help companies to anticipate competition by allowing them to experiment with new ideas and technologies. It can also help companies establish relationships with other companies and investors.

Corporate Venturing has other advantages. First, it is a way for companies to expand to new markets and increase their customer base. It can also be a good way to attract the best talent. Talented employees are often attracted by innovative companies that assume risks.

However, there are a few things to consider before embarking on such initiatives. First of all, there must be a clear objective or strategy for the company. In other words, it is not enough to do Corporate Venturing in just any start-up:

We will have to choose one that is aligned with our company's values and projects. Remember that you do not have to walk this path alone and that you can rely on other collaborators and partners.

In addition, you also have to make sure that you have the necessary resources to support the business. If, for example, the startup wants to take a rocket to the moon, we know that the project involves a very high monetary investment. It is important to consider whether the company is able to support these amounts.

Last but not least, be prepared for risk. Like all investment and like all innovation in a startup, not every venture will succeed, so be prepared for some failures along the way.

Some examples,

If you want to look in the mirror of some Corporate Venturing, you may find these cases inspiring and a good example:

  • GV, the Google capital investment company, decided to invest in Uber in 2013.
  • Intel Capital, the Intel investment arm, has invested in several emerging companies in the field of technology, such as the Autel Robotics drone company.
  • Cisco Systems has invested in several information and communication technology startups through its Cisco Investments investment unit.

Beyond the technology sector, other large companies have also carried out Corporate Venturing processes and in many cases the startups were closely related to the field of technology, since it is one of the fields in which most innovation takes place.

For example, General Electric has invested in emerging companies in the field of renewable energy and energy efficiency through its GE Ventures investment unit. Meanwhile, Procter & Gamble has invested in startups of personal care and cosmetics technology through its Connect + Develop investment unit. Unilever has invested in several food and beverage technology startups through its Unilever Ventures investment unit.

It is important to note that these are just a few examples and there are many other established companies that have also adopted Corporate Venturing strategies with different goals and objectives.

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