Corporate Innovation Through Effective Startup Investing
Corporate investment is an efficient way to help meet a corporation’s vision by harnessing the power of startup innovation.By Anis Uzzaman September 5, 2021Opinions expressed by Entrepreneur contributors are their own.
Bringing innovation to a corporate environment is inherently challenging. Many firms have established research and development or corporate development teams, but not innovation teams. Since corporations have complex organizational charts with any array of divisions and people, it’s hard for any one team to have a complete view of the big picture. Intrapreneurship programs may inspire internal innovation, but this is an expensive and risky model to support.
The nature of corporate venture capital
The popularity of corporate venture capital (VC) has varied over the years. Firms like Boeing and Dell have eliminated their internal VC teams, yet CB Insights reports that big tech companies increased their startup investments from $7.6 billion in 2019 to $16.7 billion in the first eight months of 2020. Google Ventures, Intel Capital and Qualcomm are examples of successful corporate VC organizations. However, it’s a model that’s hard to replicate. According to CB Insights, 80% of S&P 500 companies do not have an internal investment team.SPONSORED CONTENT:
10 Questions to Ask Yourself When Considering Income AnnuitiesBy: New York Life
The objective of corporate investment is to help meet a company’s vision by harnessing the power of innovation. Startups are inherently disruptive and are the most reliable source of such innovation. They typically fill technology gaps for the corporation and they might bring access to new customers and/or markets. Investing can be a more efficient way to access such resources relatively quickly.
However, it’s challenging for any corporation to identify which startups are well run and have the right solutions to improve its business. It’s also difficult to put an internal VC team in place because it’s hard to identify smart, experienced people. They are expensive to hire — especially in markets like Silicon Valley — and it’s hard to motivate them to stick around. A corporation might spend millions of dollars to assemble even a small internal team. Once in place, personnel are always at risk of considering competitive job offers.
Corporate investment is an efficient way to help meet a corporation’s vision by harnessing the power of startup innovation.By Anis Uzzaman September 5, 2021Opinions expressed by Entrepreneur contributors are their own.
Bringing innovation to a corporate environment is inherently challenging. Many firms have established research and development or corporate development teams, but not innovation teams. Since corporations have complex organizational charts with any array of divisions and people, it’s hard for any one team to have a complete view of the big picture. Intrapreneurship programs may inspire internal innovation, but this is an expensive and risky model to support.
The nature of corporate venture capital
The popularity of corporate venture capital (VC) has varied over the years. Firms like Boeing and Dell have eliminated their internal VC teams, yet CB Insights reports that big tech companies increased their startup investments from $7.6 billion in 2019 to $16.7 billion in the first eight months of 2020. Google Ventures, Intel Capital and Qualcomm are examples of successful corporate VC organizations. However, it’s a model that’s hard to replicate. According to CB Insights, 80% of S&P 500 companies do not have an internal investment team.SPONSORED CONTENT:
10 Questions to Ask Yourself When Considering Income AnnuitiesBy: New York Life
The objective of corporate investment is to help meet a company’s vision by harnessing the power of innovation. Startups are inherently disruptive and are the most reliable source of such innovation. They typically fill technology gaps for the corporation and they might bring access to new customers and/or markets. Investing can be a more efficient way to access such resources relatively quickly.
However, it’s challenging for any corporation to identify which startups are well run and have the right solutions to improve its business. It’s also difficult to put an internal VC team in place because it’s hard to identify smart, experienced people. They are expensive to hire — especially in markets like Silicon Valley — and it’s hard to motivate them to stick around. A corporation might spend millions of dollars to assemble even a small internal team. Once in place, personnel are always at risk of considering competitive job offers.
Looking ahead
We expect corporate venture capital to continue evolving over time, with a few firms succeeding and the majority likely struggling to make it work. Farming out investment expertise to an experienced, knowledgeable VC firm with a solid team is often a smart way to succeed in an affordable, less risky way. Doing so helps bring incredible innovation to benefit people all over the world.
