The best corporate investors know when not to invest

There is an interesting divergence emerging in corporate venture capital. 

On one side, the exit market is gradually opening up. Despite there being no blockbuster IPO like June’s SpaceX to hike up valuations, July’s exits numbers show that a general upward trend on liquidity events is continuing. We tracked 73 exits last month —  a 7.3% rise from June and 23.7% more than a year earlier. Five were valued at more than $1bn. On the other, corporate venture units themselves continue to face the familiar question: will the parent company still want them around when those investments finally mature? 

Our GCV Titans interview this week with Philipp Rose of Bosch Ventures offers one answer to the problem. After 12 years at the helm, Rose argues that the key is having a clear purpose and making sure that purpose is understood by the parent company. On a more practical level, Bosch Ventures also built a broader innovation toolkit around its investment activity, including Open Bosch, its venture-clienting operation, which helps business units get more immediate collaboration with startups. 

The important point is that investing is not the only way a corporation can work with an external startup. Many approaches can serve that over-arching goal of creating value for the parent corporation.  

That idea also comes through in our interview with Lisa Suennen of American Heart Association Ventures. Rather than relying on one investment model, AHA has built multiple funds and vehicles to tackle different problems and stages of healthcare innovation. Her argument is that complex problems require “many shots on goal”. 

This is an increasingly important conversation as companies work out how to organise their innovation efforts. Corporate venture capital and corporate venture building are not the same thing: one invests in external startups, while the other builds new businesses from internal ideas, assets or intellectual property. But they can be complementary parts of a broader innovation system. 

That is the subject of our GCV webinar on Wednesday: How venture builders and CVCs can collaborate to maximise impact, where we will explore how the two disciplines can work together. Sign up here to secure your place (and ensure you get the summary and replay in your inbox).  

This matters partly because the current venture market makes it tempting to think that innovation is happening somewhere else. 

Nvidia’s latest financing plans are a spectacular example. The company is reportedly working with financial institutions on more than $500bn of financing for AI infrastructure, turning its chips into an asset class in themselves (in a worrying echo of the sub-prime mortgage bundles of the early 2000s).  

But AI funding now operates in a sphere that is increasingly bifurcating from the rest of CVC. AI investments are about speed, deep pockets and the Silicon Valley power law, a risky game best played by the tech companies that live or die by this tech transition.  

The rest of the CVC sector operates on the question of how to create value. Sometimes that will mean investing early. Sometimes it will mean becoming a customer. Sometimes it will mean building something internally. Sometimes the smartest thing a CVC can do is simply keep watching until the technology — and the company’s own appetite for it — is ready. 

The challenge is not to pick one answer. It is to build an organisation capable of knowing which answer is right.    

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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