Scaling a corporate venture unit: how to survive the move from startup to expansion phase

For many corporate venture capital teams, the first three years are about proving they can operate at all: hiring a small team, doing a few deals, navigating corporate politics and showing early signs of promise. The real test comes in the next phase. Once the fund has initial wins and a green light to grow, it must shift from being “the interesting experiment” to a repeatable, strategic capability the corporation relies on.

That transition – from startup phase to expansion phase – was the focus of a recent Global Corporate Venturing webinar with Travis Bales, managing director and founding partner of Booz Allen Ventures, and Lukasz Garbowski, chief investment officer at Btomorrow Ventures (BTV), the CVC arm of British American Tobacco.

This is the point when CVC teams come under pressure to show they are providing real value to the corporation. They may be having to reposition themselves in the face of shifting strategy or leadership at the parent company, and they may need to change staffing models and operating procedures as their portfolio of startups grows.

These were some of the lessons corporate investors entering the expansion phase should take from the discussion.

Lesson 1: treat the charter as your north star

Discipline around the original mandate becomes more critical, not less, as the unit scales.

Bales’ first headline learning was that as the unit matured, it became increasingly important to map the value it was creating for the parent company. “You obviously created the program for a reason. You want to continue to reinforce why you’re there and how you’re adding value,” he said, ideally with “early wins that can help reinforce what you’re doing there.”

Garbowski has arrived at a similar conclusion from a different direction. BTV began with the ambition to achieve top-level financial returns, like any venture capital investor, but over time the team realised that for longevity, strategic value must dominate.

“While CVCs are about strategic and financial delivery, I think that the strategic one trumps the financial one, and it also comes with certain consequences as to even what level of financial returns we are aiming for.”

What ultimately “keeps you going”, he argued, is “defining and showcasing to the corporate the strategic value… It’s what gives you the mandate from the corporate to continue operations.”

For expansion-phase CVCs, this means being explicit about trade-offs. As Bales put it bluntly:

“Your most successful power law VC investment is not the most strategically relevant one to the parent… Hopefully it’s the same investment, but might not be. And so you need to be able to manage both of those things.”

Lesson 2: hardwire alignment with the business – repeatedly

The early years often favour semi-detached structures that can move quickly and “fly under the radar”. In the expansion phase, that distance becomes dangerous. Garbowski admitted that BTV had “distanced ourselves too much from the corporate” under its first fund, with predictable consequences:

“The corporate doesn’t really understand what the CVC fund is doing. Equally, the corporate is less willing after the investment is done to help the CVC fund to extract the most value from the startups.”

To correct this, BTV built multiple points of contact into its operating model:

• A quarterly steering committee with senior executives: “checking in with them as to whether what we are looking at consistently aligns with what they expect us to look at.”
• A requirement that “for every investment that we are proposing, we need to have strategic sponsorship from the business unit.” Garbowski acknowledged this “adds the headache, complications, it extends the deal timelines” but stressed that when they go to the investment committee, “it’s somebody from the business function who vouches for the strategic relevance to the corporate.”
• Systematic engagement with national markets: “We are proactively working with them on asking them what they see in the market. They are a very valuable source of investment ideas.”

Bales described a similar push towards formal ownership structures inside the business:

“We create an ownership structure inside the business that not only involves regular touchpoints but also the opportunity to look at how you pursue deals together. When we do an investment case, we look at what we think those outcomes will be from the strategic side.”

Critically, that alignment is not a one-off exercise. Corporates change leadership, strategy and organisation charts regularly. Garbowski warned against assuming that once the CVC unit is established, everyone understands its function.

“I would not underestimate the importance of continued education, almost being on repeat,” he says. “Corporate has a high frequency of changes. Constantly repeating the message as to what is the purpose of the CVC, educating stakeholders, even repeating the basics lands very well because if people don’t understand you, then they are distancing themselves from the CVC fund.”

Lesson 3: build for portfolio management, not just dealmaking

In the startup years, a CVC can survive as a lean, deal-centric team. By the expansion phase, portfolio management becomes a dominant task – and a potential point of failure if under-resourced.

Bales noted that “portfolio management becomes a real and large part of your job” once you move beyond a handful of companies. Lee Sessions, course director at the GCV Institute and CV ecosystem head, added that “once you get to two dozen, it’s hard to spend any time doing new investments if you don’t have a dedicated resource to managing the current portfolio.”

Both BTV and Booz Allen have responded by investing in platform and growth functions.

Bales explained, “We did add capability on the platform side [to] nurture and grow and align our portfolio of companies better back to the parent. That’s where we made a pretty significant investment.”

That investment pays off, however, in building relationships with business units, he says. It is reassuring for business unit leaders to be dealing with someone who understands their vertical, their space and customers, and who can shepherd them through working with the portfolio company.

Garbowski, facing the same challenge, created what BTV calls a “portfolio growth function”.

“What we have started doing under Fund Two, we have started building what we call portfolio growth function… the role of that person is after the investment, leverage corporate better to support the startup with the expansion, and equally to link better that startup with embedding it within the corporate.”

The unglamorous operational side matters too. Fair value calculations, audits and internal reporting can swamp a small team. Garbowski admitted BTV had underestimated the effort required for providing the corporate parent with updates of the fair value of the portfolio and was forced to later play catchup. He urged others to address these governance questions from the start.

Bales’s team went further, deliberately designing something that “looks like and feels like what some might consider a traditional GPLP relationship”, including “quarterly financial reviews” and “a third-party fund administrator” to handle valuations and give the parent updates. In the early days this seemed like overkill but as the portfolio grew it quickly became an essential structure.

Lesson 4: pace yourself – and your portfolio

One of the more counterintuitive lessons from both teams is that it is fine for corporate investors to not move at the pace of external VCs. Bales described Booz Allen Ventures as “a very low volume shop… four to six deals a year”, and emphasised they “have not changed that pacing” even as the fund has scaled.

BTV learned the same lesson from trying to move at market speed.

“At the beginning we have been trying to match the pace of the external market to win deals, and I think that the hard learning was that as a CVC, it’s difficult to match that external pace.”

Although the BTV team can handle the mechanics of the deal at the same speed as VCs, the need for each startup investment to have a business unit sponsor slows things now. The team has adjusted by starting to engage with startups much earlier in their fundraising journey. They now “engage with the startups already now, as a preparation for the next investment possibility for almost the next round”, using that time to “ensure the strategic alignment”.

Scaling the team itself also requires restraint. Garbowski reflected that BTV has grown from “a team of two individuals” to “a team of 15”, which “from the corporate perspective, it’s a sizeable team”. His warning to others:

“Sometimes growing too quickly within the corporate is probably also counterproductive, despite all the kind of hype and the good intention and reasoning behind that… equally on the back of that, not scaling your portfolio too quickly.”

Lesson 5: manage perception – inside and outside

As CVC units grow, they are judged more like professional investors – by founders, co-investors and internal stakeholders.

On the founder side, Garbowski highlighted the importance of coupling investment with tangible commercial value, citing a Brazilian protein snacks company where BTV’s cheque came with a distribution agreement:

“That investment was coupled with the commercial agreement that BAT Brazil started distributing the startup’s products, and that way increasing the revenues and the penetration of the startup.”

Early investors, he said, “very much welcome that” additional scale.

For companies that cease to be strategic, both speakers stressed the need to behave as a responsible financial investor rather than simply walking away. BTV explicitly “drop all of our strategic rights and limitations” and then “act almost as a financial VC”, including helping with exits and follow-ons.

“Even a small gesture of goodwill that we are participating in the run, it sends a very positive signal to other investors that the key investor is still involved.”

Internally, CVC leaders must embrace what one peer memorably labelled the “chief propaganda officer” role. Garbowski has taken that to heart:

“Let’s learn how to celebrate successes and showcase them to the corporate. Right, that adds to the whole landing the strategic value.”

Bales, for his part, links perception directly to hard outcomes:

“There’s nothing strategic about losing money, rightly. So how do you figure out your start to schedule and better understand how you’re getting liquidity from your portfolio and what that might look like… and what that returns on the fund side as well.”

The move from startup to expansion phase does not fundamentally change what a CVC is trying to do. It does, however, change the burden of proof. Early promise is no longer enough. As these two programmes show, the CVCs that survive and gain influence are those that treat their charter as a living contract, build institutional links into the core business, invest early in portfolio and governance infrastructure, and are disciplined about pace – of deals, headcount and expectations.

Watch the full webinar here

This webinar was part of our monthly series of The Next Wave webinars, exploring corporate venture and innovation.

The next webinar in our series, on 14 October, 2026 will be Robotics meets logistics: The next frontier for investors, looking at the opportunities opening up from the intersection of physical AI and supply chains.

Sign up here to secure a place.