10 practical operating tips for corporate investors

Investing in startups has gone from being a “luxury” for companies to a critical strategic necessity as AI brings in an era of rapid transformation. Corporate venture investment is at a record level, both in the number of companies making investments and the dollar sums being committed. It has proven itself a steady pillar in the startup ecosystem at a time when venture capital has been in decline.

This makes corporate investment a more valued partner to venture capital. Nicolas Sauvage, president of TDK Ventures, spoke of a “yin and yang” system in which traditional venture capital provides speed and discipline while corporate investors offer the practical assistance — factories, supply chains, customer relationships — for scaling deep tech and AI startups.

“We are entering a new phase of venture. More capital, more complexity, bigger problems to solve. No single investor can do it alone. We need both,” Sauvage said on a panel discussion at the GCVI Summit in Monterey, California, last week. “If we get this right, corporate venture capital will become one of the most powerful engines of innovation in the coming decade.”

“Getting it right” means CVC units working at a new level of efficiency and professionalism. Sauvage mooted the idea of professional accreditation for corporate investors, similar to what exists for accountants or engineers.

The GCV Institute, which provides training for corporate venture professionals, could become a cornerstone to developing this kind of accreditation. But ahead of a formal step like this, there were a number of ideas shared at the GCVI Summit which corporate venture teams should consider adopting to increase their effectiveness.

Here are some that we picked out from the two-day programme:

Clarity on the entrepreneur as the customer

Corporate investors can feel as though they have two masters — the startup founders they back and the corporation that provides the unit’s funding. But the most effective CVCs are clear that they serve the entrepreneur. Entrepreneurs are the ones bringing the new ideas and taking the greatest risks. Unless they succeed, the corporate venture unit gains nothing.

1. Measure NPS. One way to check that the CVC unit is serving startups well is to measure this via a net promoter score (NPS) methodology, evaluating how effectively the team delivers value beyond capital.
2. Concierge services for startups. Another idea, used by Microsoft’s M12 unit, is to assign dedicated team members as “concierges” to help portfolio companies navigate the parent organisation. M12 was praised by several entrepreneurs for having a clear playbook for how startups could access the different strands of assistance Microsoft could give, from pilot projects to sales channels.

   “Almost half of our team is focused on the success of our portfolio companies, six dedicated folks,” said Michelle Gonzalez, global head of M12. “We have a lot of case studies of where we have partnered very well, each of our portfolio companies getting a “concierge” to help them navigate Microsoft.”

3. Create a structured playbook for startups looking to work with the organisation. Deidre Paknad, CEO of WorkBoard, a management software startup whose backers include M12, Capital One Ventures, Intel Capital and Workday Ventures, explained that having formal structures to guide entrepreneurs is useful.

   “Having an actual plan and a playbook that you run as opposed to each conversation with each founder being bespoke,” is helpful, Paknad said. A structured approach might mean outlining what can be done in the first three months, six months and over the course or a year, and how these actions are activated by the corporate side.

4. Have a budget for pilots. Having a separate bucket of funding at the CVC unit for non-dilutive funding for pilot projects can help speed up getting portfolio companies and business units working together. This is an approach taken by Bill Taranto and his team at MSD Global Health Innovation Fund, which has proven successful to date.

   “We have about a 75% conversion rate on those early pilots turning into more scaled relationships,” said Joel Krikston, managing director at the fund.

Optimising the relationship with the parent corporation.

1. Create strategic “heat maps” to clarify how to collaborate with internal R&D teams. Identify which technologies the corporate will build organically vs those that the CVC will invest in to reduce channel conflict.
2. Perfect the 2-pager. Make communication with the C-level executives brief and efficient. Move from producing long research papers to two-page briefings that focus on “why this topic now” and presenting trends observed across the startup ecosystem.
3. Position CVC as a formal intelligence unit for the corporate board, identifying disruptive technologies five to 10 years before it becomes obvious to the internal product teams.

   Barbry McGann, head of Workday Ventures, said that one of her primary goals was for the unit to become a “market sensor” to bring an outside perspective back into the parent organisation.

4. Assign internal “customers” to each investor on the team: Instead of general scouting, give every venture investor a specific internal business unit as its “customer”. The investor’s job is to infiltrate that unit’s workstreams, understand its strategic priorities, and identify exactly where external innovation could solve its challenges.

   Krikston explained that at MSD Global Health Innovation Fund this strategy, which he called “enterprise coverage,” was designed to move beyond passive portfolio sharing and instead proactively align the venture team with the needs of the parent corporation.

Optimising the operations of the CVC unit:

1. Build a proprietary data moat from day one: Document all meeting notes, including what was learned rather than just what was done, in a cloud-based CRM. This historical record becomes a proprietary data asset that can be used by AI agents for advanced pattern recognition and connecting the dots across years of interactions.
2. Automate due diligence and networking via AI: Deploy AI to automate the technical side of due diligence, such as scanning data rooms and creating reports. Units can also use AI to scan past meeting notes to automatically match a portfolio company’s upcoming fundraising needs with specific investor interests observed by team members.