Corporate venture capital (CVC) funds are on the rise. Consider the growing number of big companies creating funds to find promising startups: Google Ventures, Intel Capital, Qualcomm Ventures, Novartis Venture Funds, Samsung Ventures, AOL Ventures, Dell Ventures, Dow Venture Capital, Microsoft Ventures, and Citi Ventures. And that's just a short list.
Going with a CVC fund, especially if your startup is in a similar category to the company behind the fund, offers benefits that go beyond money--it's a strategic move that can promote your long-term growth and innovation.
To dig deeper into the more-than-monetary benefits of CVC funds, I recently spoke with Harshul Sanghi, managing partner of AmEx Ventures. AmEx Ventures has invested in more than 10 startups, including mobile rewards company Kiip, personal search company Ness Computing, and personal financial advisory platform LearnVest.
Here are some points to consider when thinking of CVC as a funding option:
The money and the interest is there.
Sanghi says corporations have an unprecedented amount of capital sitting on their balance sheets. He also says working with startups helps large companies gain insight into the next wave of emerging technologies, helping them to innovate faster and ultimately bring more value to customers.
Look beyond the money.
There's more to be gained from CVC than funding. Speaking to AmEx Ventures' competitive advantage as a CVC fund, Sanghi says startups can benefit from scale, infrastructure, institutional knowledge, and relationships with cardmembers and merchants. The chance to be affiliated with a thriving brand is a big opportunity. There is also the benefit of more easily navigating regulatory and consumer adoption challenges once you have a relationship with an established company.
Make it about them, not you.
Obtaining CVC requires a strong pitch not just focused on the promise of your startup, but also what's in it for the corporation. You must convey how you can benefit the organization, not how it can help you solve the challenges you're facing as a startup. This requires understanding the core business of the fund, Sanghi says, as well as why pursuing a relationship would be mutually beneficial for both organizations.
What are your thoughts on the rising trend of CVC?