Can corporate venture serve two masters?

Sometimes I wonder if corporate investment units get it wrong because they don’t follow the advice they give to their own portfolio companies: start with your customer’s pain points. Startup companies are always encouraged to understand a key customer need and find solutions for it, rather than fixating on a beautiful technology in search of a purpose. Anyone who has done even one Business 101 course knows this.  

And yet, corporate investment teams are often still struggling to match portfolio companies to problems. They hire some business development people, do a bit more listening and gain more traction, but there is still that friction. Some part of the portfolio never “attaches” to the core. If the team never irons this out sufficiently, it becomes one of those units that gets quietly disbanded.  

Venture clienting, in contrast, tends to nail it on the pain points. A webinar that brought together venture clienting experts from Holcim MAQER Ventures, ProgressoX and Maersk Growth made this point clearly. In all three programmes the starting point is finding problem areas, then scouting for solutions. Because there is no equity investment to negotiate, the companies can quickly bring in the startups to test what they can do. If it works, great, the project can be scaled up. In some cases, investment may even follow.  

Venture clienting feels more like the traditional cycle of dating then marriage, while corporate investment is a bit more Married at First Sight. It is worth noting that in that famous couples show, a host of experts pair up the “spouses” (using psychology, anthropology and DNA) but yet, only 11 of the 69 couples brought together in 18 seasons of the US edition are still together. It seems you can’t due diligence chemistry — and the same may be true in an intimate supplier relationship.  

More than this, though, I think the main reason that venture clienting professionals and corporate investors differ on their pain point analysis is because they have very different concepts of who the client is. Corporate investors always say the startup is their client — we heard that repeatedly at the GCVI Summit in Monterey. This is what VCs say, after all, and frankly, CVCs chasing entry into the hottest AI rounds in Silicon Valley right now, must make the same promises.  

But corporate venturers really have two masters — the startup and the corporate that actually pays their salaries and provides the fund. Venture clienting professionals are much more clear that the corporate is their client. They may work with startups, they may support and champion startups, but the corporate is the client, and it is the corporation’s gains that are their KPIs. 

This editor’s note was first published in GCV’s Blueprint newsletter, which tracks corporate venture news, key deals, new funds best practice and jobs.

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