Corporate Venture Capital Opens New Avenues for Growth

In recent years, corporate venture capital (CVC) has emerged as a dynamic force in the investment landscape. Last year, CVCs participated in 21.7% of all European VC rounds, the highest annual percentage to date, according to PitchBook.

The surge in CVC activity can be attributed to various factors. Innovation and technology access is essential in today's rapidly evolving market. Corporations can engage in venture capital activities to gain access to cutting-edge technologies and business models which may benefit their own operations. Additionally, CVC funds allow corporations to diversify their portfolios and seek new revenue streams.

Recent CVC activity may be traced to the VC market downturn, relative to 2021 sellers’ market highs. With corporations notorious for moving slower than their VC counterparts, today’s passive market and longer due diligence processes allow CVC investors to participate in rounds they may have otherwise been too late for.

Companies have their own benefits of CVCs on their cap tables. More than just financial backing, CVCs can provide valuable market insights, operational expertise, and access to industry networks. Furthermore, having a reputable corporation as a shareholder may enhance a company's credibility. This can be advantageous when building relationships with customers, partners, and further investors.

As corporations continue to recognise the strategic and financial benefits of venture capital investing, the collaboration between CVCs and early-stage companies is likely to strengthen further. It is important for business owners to not only consider the financial contribution, but the strategic value shareholders can bring. Businesses can opt to engage an advisor to facilitate discussions with a diverse range of investor types and determine the best fit for their unique needs.