Corporate venture wants to change the company. But the VC rules still apply

There is a slightly awkward question lurking behind a lot of the conversations about corporate venture at the moment: What exactly are we expecting CVC to do? 

For years, the answer was relatively straightforward: find interesting startups, invest in them, generate a financial return and, ideally, find some strategic value along the way. That doesn’t seem ambitious enough anymore. 

Kendra Rauschenberger, head of Siemens Energy Ventures, used a phrase in an interview with us recently that I like: corporate venture should be an “engine for industrial transformation”. 

That is quite a job description. It suggests that CVC isn’t simply there to build a portfolio. It should help a company understand where its industry is going, bring in new technologies, and ultimately help change the way the company operates. 

The catch is that corporate venture is still venture capital. 

Jim Adler of Toyota Ventures made this point particularly strongly in our recent webinar on venture building. The basic VC formula has been around since 1948. It has been refined, tested and replicated thousands of times. It would be an extraordinary display of corporate hubris to assume that the rules suddenly no longer apply because the money happens to come from a large company. 

And yet corporations are asking venture teams to do something that conventional VCs don’t have to do: change the organisation that owns them. This is where things get interesting. 

Our webinar last week brought together Axel Deniz of Bosch Business Innovations, Ralph Wilson of Arup Ventures and Jim Adler of Toyota Ventures to talk about venture building. Their approaches are very different, but one of the things that struck me was how little sense it makes to think about venture building as a standalone activity. 

A company has a whole toolkit for exploring new opportunities. It can invest in an external startup. It can build something internally. It can become a customer. It can form a partnership. It can spin something out. It can acquire it. That breadth of options is another advantage over standard VC.  

And the interesting question isn’t necessarily deciding which tool is best but looking at how to join them up. 

Bosch, for example, has separate arms for investment activity, venture clienting and venture building, each allowed to do a separate job. LAB7, Aramco’s venture building operation, discovered that building companies from internal ideas was useful for testing its model but that external startups gave it a much more scalable source of talent and technology. 

The next phase of corporate venture is not about inventing a new version of the VC model. It is about getting better at connecting and applying the existing tools. That’s more complicated than it sounds. Which is why we are trying to get a better handle on what companies are actually doing through our GCV Venture Building Survey. 

There is still surprisingly little hard data on corporate venture building: how many companies are doing it, how much they spend, where their ideas come from, how they organise the teams and, most importantly, what happens to the ventures afterwards. 

If you are involved in venture building at your company, please take a few minutes to complete the survey. We want this to become a useful benchmark for the people actually doing the work, rather than another theoretical discussion about what companies ought to be doing. 

So, back to that awkward question: what exactly are we expecting CVC to do? 

Quite a lot, it seems. 

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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