CVC needs to elevate its strategic tools

The tension in CVC always comes back to this: they serve strategic goals but use financial means. Corporate investors take the methodology of venture capital, quite rightly, as it has been shown over the past six or seven decades at least to be an effective (if uneven) means of producing innovation. They seek to be adept financial investors — an often-repeated phrase in the industry is: “there is nothing strategic about losing money”.  

But at the same time, there is nothing inherently strategic about making money — if that is all the startup portfolio brings you.  

Sometimes corporate investors get so caught up in the financial side that the strategic part takes a back seat, for example, in the way portfolio companies are reviewed. As Ellie Schweska of TechNexus puts it in her op ed: “Somewhere between the term sheet and the first quarterly business review, that strategic thinking quietly leaves the room.”  

Because strategic measurement can be slippery to pin down, it often ends up not being part of ongoing evaluations of the portfolio. Schweska offers the methodology that TechNexus has developed as a guide for anyone facing this problem. It is a scorecard that tracks everything a financial investor would and adds to that these questions:  

• can the collaboration win the corporate partner new customers 
• open a new revenue stream 
• save it R&D spend it would otherwise carry 
• or improve its operating efficiency 

It’s not rocket science to ask these questions — the trick is to bake these into the routines of CVC reporting.  

That mismatch between financial and strategic also comes into areas like founder assessment. VC investors are typically looking for the Steve Jobs archetype and unwittingly condition all founders to perform to this expectation. This doesn’t even serve the VC community that well, points out University of Oxford researcher Susanna Kislenko. For corporate investors these high-conviction maverick personalities might be even more difficult post-investment.  

And CVC careers, too, obey different aims and timelines than regular VC. Judged on purely VC scales, corporate investors can look unimpressive — unless the other, strategic side of what they do is better acknowledged and understood.  

And so, on that note, I come back to the two perennial asks I have for the CVC community. Please add your data to our annual survey so we can construct a robust performance benchmark that is specific to CVC, where the strategic side is recognised.   

Take the survey here.  

And please nominate the star performers on your team for our Rising Stars and Emerging Leaders awards. Goodness knows they need the morale boost.   

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.

Want to get Blueprint directly in your inbox every Monday? Sign up for free here.