A majority of CVCs still prefer to hire experienced investors externally, but internal hiring may be increasing in popularity.
One of the ongoing debates within the corporate venture sector is hiring: is it better to recruit team members from parent company, who understand the business and have strong internal connections, or to bring in external people with specific venture capital investment skills.
Both sides have clear advantages and disadvantages, and everyone has their own preference. Gen Tsuchikawa, for example, the CEO of Sony Ventures and regular recipient of the GCV Powerlist, favours the internal strategy – hiring almost 80% of his team from the Sony Group. He focuses on the hires’ skills and interests rather than their direct experience. M Ventures, the strategic corporate venture arm of Merck KGaA, however, prefer not to risk ‘contaminating’ or taking advantage of startups by hiring from their parent company, opting for an external approach.
After covering this debate in more detail in Kim Moore’s piece on how to hire (and keep) a great CVC team, we did some further research.
We asked Global Corporate Venturing’s LinkedIn followers where they prefer to source their CVC members, as part of the GCV Keystone Benchmarking Annual Survey. Some 47% of respondents stated that they preferred to hire from external, investment-focused businesses, such as venture capital firms and investment banks.
Hiring from the parent company was the second most popular, with 28% opting for this. Hiring from management consultant firms or other CVC teams were even less popular with 16% and 9% of the votes respectively.
Comparing this with the World of Corporate Venturing Report data we recorded last year shows an interesting trend.
The majority of respondents in that full annual survey (67%) also sourced team members from VCs or PE firms, whereas internal hires accounted for only 32%, falling behind all external options. Instead, sourcing from other CVCs was the second most popular answer at 56%, compared to the lowest in the LinkedIn poll.
The data isn’t directly comparable as the WoCV data is more in-depth and allowed for multiple selections, whereas the more recent poll LinkedIn was limited to four grouped options and one selection. However, it raises the question of whether internal hiring is becoming more popular.
With the pace of startup funding rounds down dramatically in the last 18 months, many corporate venturing units have shifted more emphasis on creating links and joint projects between their portfolio companies and the corporate parent. That means team members with a strong internal links have become more valuable.
We’d love to do a full comparison with last year so if you haven’t already done so, could you take a moment to fill in the full annual survey here ? It takes around 30 minutes to complete but is a highly valuable reference for the whole industry. All respondents will receive a free copy of the full report when it comes out in early 2024.