How a corporate venture team can survive beyond the first three years

Corporate venture capital is no longer a side experiment. CVC units are now present in about 20% of the startup funding rounds annually. Yet the period that determines whether a new unit endures or is quietly shut down is brutally compressed: the first three years.

Jonathan Sagot, partner at Fenwick, Dan Ateya, president and managing director of RTX Ventures and Laurel Buckner, vice president of new business ventures at BHP, joined Lee Sessions, corporate venture ecosystem head at the GCV Institute, on a webinar to discuss what really matters in those early years.

Setting up an investment arm with a clear mandate, the right team and structure as well as top-level management support are the key foundation stones. But what happens in the first three years after launch determines the real staying power. It is less about writing cheques and more about earning the right to exist inside a complex corporate system.

Below are six key lessons that came out of the discussion:

1. Test the organisation’s patience upfront

The most elegant investment thesis will fail if the sponsoring leadership is secretly on a two-year clock.

Corporate patience – or the lack of it – is one of the most decisive, and most underestimated, factors. As Jonathan Sagot puts it, if you are evaluating whether to join or launch a nascent unit, it is “critical to get an understanding of how patient leadership is planning to be with the development of this… new business line at the company.”

He warns against any illusion that quick financial wins will justify the unit. Three years in, a CVC team may have achieved some good returns from investments if they are lucky, but this is likely to be a much longer game.

“Investments can take seven to 10 years to bear any fruit, and many of the losses will come before the gains,” says Sagot. Yet the typical executive tenure is around three years.

The implication for new CVC heads is clear: before worring about dealflow, establish whether senior leadership truly understands the time horizon – and lock that understanding into goals, governance and expectations.

2. Choose a legal structure that signals commitment

The legal wrapper for a CVC is not just an accounting detail; it is a signal to internal stakeholders, founders and co-investors about how serious the corporation is.

Sagot describes three “core choices”:

• Fully integrated – the venture team sits inside the parent entity, even if it brands itself “Mothership Ventures”. The benefits of this are that it is very easy to set up. However, the downside is that any investment documents are in the parent company’s name “which can raise questions,” says Sagot. These types of units can be easy to shut down if interest in CVC wanes at the parent company.
• Wholly owned subsidiary (e.g. ‘Mothership Ventures LLC’) – this is the most common model. This gives the CVC team some separation from the parent company, while still retaining a close relationship. The subsidiary can set its own HR policies and compensation, including being able to offer carried interest payments — or a synthetic form of this compensation instrument for investors, helping with recruitment and retention. This structure, says Sagot, signals that the parent company has really bought into the idea of CVC.
• Single-LP fund structure – a conventional VC fund with the corporate as sole LP. This offers the maximum separation between the CVC and parent company, with clean accounting. However, warns Sagot, “when you are really so separate, it can be challenging to feel part of the broader organisation” and to demonstrate strategic value. This legal structure is rarely the one that companies first choose when starting with corporate venturing, and commonly emerges later as the CVC unit evolves.

3. Anchor the thesis in corporate strategy – and speak the same language

Both RTX Ventures and BHP Ventures have built their mandate around existing corporate strategy rather than a free-floating “innovation” agenda.

At BHP, Buckner explains, the venture team aligned explicitly with “strategic business objectives from the CEO’s office”. With 90,000 employees in a 140‑year‑old mining group, this was less a nice-to-have than a survival tactic:

“We speak a common language… I can say we’re really focused on this particular strategic business objective, and that allows us all to know what that means and why we’re doing it,” Buckner says.

RTX similarly rooted its mandate in the company’s technology roadmaps. Ateya describes the charter as “to build a tool that really supports our technology organisation and the tech roadmaps that they build and maintain each year, while also remaining relevant to its three major businesses – Pratt & Whitney, Collins Aerospace and Raytheon”.

For new CVC leaders, the lesson is that the investment thesis must be legible to business units and the C‑suite. If internal stakeholders cannot see their priorities reflected in the deal pipeline, they will have little incentive to champion the fund when budgets tighten or leaders change.

Our next GCV Institute course delves into the critical building blocks for professional strategic investment programmes.

More details on the course and how it can help your unit last beyond the initial years here.

4. Start dealflow early – but with a visible filter

The panel is clear: a corporate venture unit that does not invest quickly risks irrelevance. Yet indiscriminate investing can be equally damaging.

“For [a] CVC unit, I believe you do have to make investments,” Ateya says. “They want to deploy capital, we need to go and find investments.” But he is equally explicit that this is not a race to volume:

“It really starts in that first year of building a robust pipeline where you can truly demonstrate a filter and discern between what is attractive and what is not attractive,” he says.

By the 18‑month mark, RTX sought to show three things:

• A clear pipeline of companies it was tracking in relevant sectors.
• A handful of good strategic investments with obvious relevance.
• A body of collaborations between portfolio companies and internal units.

5. Build a small, capable team – and add portfolio capability early

At RTX, Ateya was determined to keep the team small for as long as possible, keeping the operating budget to a “reasonable level” until the unit could start to demonstrate tangible wins.  

The initial core team was a mix of internal people who could navigate the complex engineering-led organisation and external hires with experience of leading transactions. Only once RTX’s portfolio approached about 20 companies did the team add a dedicated portfolio development leader to handle integration between the startups in the portfolio and the parent company.  

BHP, by contrast, embedded portfolio thinking from day one. The group created “two arms internally, investments and portfolio” says Buckner. The portfolio team makes sure value from the investment is taken back into BHP.

Both models converge on the same principle: without someone explicitly responsible for landing value inside the business units, the CVC becomes vulnerable when leadership inevitably asks, “What have we got for this spend?”

6. Communicate relentlessly

Perhaps the strongest consensus across the panel is on the centrality of communication. Without constant, daily communication across the parent business about what it is doing, a CVC unit risks being forgotten about.

“You need to be constantly talking to folks in multiple business lines, talking to your leadership team, talking about the investments that you’ve made. This is an everyday kind of grind, and you need to treat it that way. It’s a marathon,” says Sagot.

If you do not, “people start to forget about you, they’ll be [asking]: ‘what are we doing with this thing?’”

Buckner operationalised this with systematic stakeholder mapping and an internal roadshow. In the first 18 months she spent a lot of time on airplanes meeting key stakeholders worldwide. Her portfolio lead refreshes the stakeholder map annually, assigning team members to specific relationships.

Crucially, BHP invested in storytelling. Buckner hired a dedicated communications specialist who came internally from BHP and is “very good at telling stories the way that we like to hear them internally”. The team produces case studies and tells stories about the value that portfolio startups are creating for the company, even as early as six months after an investment.

This is not cosmetic PR. For a young CVC, narrative is the mechanism by which isolated pilots and experiments are reinterpreted as evidence of strategic momentum – and by which the unit earns the trust to survive beyond the tenure of the executive who created it.

See the full webinar replay here.

This webinar is part of our ongoing monthly The Next Wave series in which we discuss the practice of corporate venturing. Full details of upcoming webinars are here.