How To Launch A Corporate Venture Capital Arm

By: Neal Hansch

Over 200 new CVC, or corporate venture capital, arms came to market last year, and collectively, corporate venturing groups invested a record $165 billion-plus in 2021.

Despite the turbulent macroeconomic headwinds that have defined the first half of this year, the number of CVC-backed deals have continued to climb, and last quarter set an all-time high.

Are you ready to join the ever-growing landscape of corporations that have successfully launched their own venture arms in recent years?

If so, the first step is to recognize that engineering the successful launch of a CVC requires methodical pre- and post-flight planning that addresses a handful of fundamental and universal components including setting the purpose, design and operating principles of these types of strategic investment capabilities.

Mission success

The first foundational step is to achieve internal alignment as to the core drivers behind the creation of a new CVC.

Confirming from the onset the purpose of the mission at hand, as well as establishing the definition of success over time for the strategic investment activities, serves as a powerful forcing function. This helps to ensure the expectations of the key stakeholders are sufficiently in sync and the proverbial goal posts agreed upon.

Once those elements are established, it’s then critical to clearly outline the “operator’s manual” for the CVC unit. This outline should address such topics as: Where will this team fit into the organization? What will be the approval process for investment decisions? What will be the initial focus areas and deal profiles (size/stage/geographies) to be targeted? Will investments require support from business unit leaders? Will investments depend on commercial deals being inked in parallel with the startup? If all goes according to plan, how do we expect the CVC group will evolve over time?

The flight team

Above all else, putting the right team in place is tantamount to setting the stage for the success of any corporate venture group. Seldom is this as simple as tapping one or more existing employees to shift roles and spin up, then manage, the new CVC arm on their own.

If  experience gaps exist, then corporates are well advised to marry their internal talent and complement it by recruiting individuals from the outside with a track record of direct investing into emerging technology companies.

Ideally, these future colleagues also have previously lived in or navigated the corporate hallways and are seasoned in balancing the priorities and processes of major corporations. In parallel to shifting existing and recruiting new talent, an increasing number of CVCs may choose to complement their full-time teams by leveraging the skills of expert third-party advisory firms that specialize in designing, launching and providing ongoing, day-to-day support to strategic investment programs across their life cycles.

Liftoff and landing

Equally as important to solidifying internal C-suite support and securing the right staffing for any new CVC is having a comprehensive and well thought out game plan to drive awareness and visibility of this effort with the right audiences in the market.

Specifically, top entrepreneurs, venture capital investors, service providers and the other most impactful nodes across the global startup ecosystems must first know that the CVC is now “open for business.”

Moreover, these players need to understand and appreciate the CVC’s initial focus areas and target deal profiles and the value proposition of the CVC to potential future portfolio companies it will be actively pursuing, diligencing and seeking to invest in over time. Simply put, getting off the ground is an accomplishment, but represents only the start of the journey.

It’s undeniable that CVC investment activity levels continue to break records and the Fortune 1000 today are playing a more important role than ever in backing thousands of startups each year, from San Francisco to Shanghai, Tokyo to Tel Aviv, and everywhere in between.

While launching a new CVC arm remains no small feat, the odds of success and ultimately generating meaningful impact over time are maximized by having in place, from the onset, a well-defined and understood purpose, operational design and experienced pilots at the helm.

 Neal Hansch is the CEO and managing partner of Silicon Foundry, an innovation advisory firm that builds bridges between leading global corporations and the emerging tech economy. Hansch leverages over 25 years of venture capital, product management, technology operations, corporate development and trusted advisory experience to lead the firm, which helps its member organizations navigate new technologies and market shifts, discover and engage with key emerging leaders, and unlock high-impact opportunities.

Illustration: Dom Guzman