In an era where perception often drives valuation, reputation has become a critical yet under appreciated asset for CVC leaders.

Reputation matters for any business. A number of years ago, research by Lloyd’s of London and KPMG quantified that reputation accounts for up to 35% of the market capitalisation of leading equity indices. Reputation is not a ‘nice-to-have’ for businesses but a strategic imperative. It can help deliver growth by establishing a positive perception among customers and prospective partners.

Reputation is particularly valuable in high-growth sectors like technology and healthcare, where it contributes up to 43% of business value.

However, reputation can be particularly valuable for a corporate venturing unit (CVC). CVCs are measured by their financial returns and the strategic value they can bring to the parent company but it can take time to demonstrate these. In the interim, having a good reputation, both internally and externally, can help keep people on side. 

The reputation of the fund and its portfolio companies can directly impact deal flow, valuation, and stakeholder trust. A strong reputation can attract high-potential startups while reassuring parent organisations of strategic alignment. Conversely, reputational missteps — whether related to governance, ethics, or operational failures — can erode trust and diminish market opportunities.

But are CVC leaders investing enough in how their units or the companies that they invest in are perceived so that the reputation of their ventures is best positioned to succeed in the market?

Corporate and CVC reputations are closely linked

A CVC’s reputation doesn’t exist in isolation; it is intrinsically linked to the parent company. This relationship can either amplify value or, equally, expose vulnerabilities.

A well-regarded parent company lends credibility to its CVC, creating a halo effect that attracts innovative startups and investors. For example, a CVC associated with a globally respected brand like Alphabet’s GV or Johnson & Johnson Innovation benefits from the parent’s strong market standing.

Sony Ventures Corporation, founded in 2016 by Gen Tsuchikawa, is an example of a world-leading brand with a strong positive perception. He created a fund that has invested, supported innovation and secured a return from opportunities from a wide array of sectors, including entertainment, health-tech, fintech and deep tech. How Sony is perceived has enabled it to expand its influence and expand its reach into markets where many opportunities are emerging.

LG Ventures is another example where the strategic vision of the parent company has enabled it to support innovation in artificial intelligence, mobility, advanced materials, life sciences, next-generation display, mobile, and 5G through the $805 million fund it manages.

However, this linkage can also be a double-edged sword. Misaligned objectives or reputational crises in the CVC can reflect poorly on the parent company, undermining its broader market perception. To avoid this, leaders must ensure their strategies align with clear governance structures and that their communications and messaging relate to their respective internal and external stakeholders and audiences.

General council leaders already understand the importance of navigating through the court of public opinion. But communications and reputational specialists can deliver added value to boards by providing strategic insight on how to best position their individual corporate venturing units.

A good reputation attracts the best startups

For startups seeking funding, reputation matters as much as financial backing. It’s not just the capital but the intellectual insight and experience that they can gain from a corporation and companies up and down their supply chain. Entrepreneurs often seek disruptive partners who can offer strategic guidance, market access and credibility.

A CVC fund with a reputation for fostering innovation and supporting founders can be far more attractive than one perceived as transactional or misaligned with startup values.

This dynamic gives well-regarded CVCs a competitive edge in securing deals with high-potential startups. Equally, it helps when partnering with a VC in a deal. For example, funds that actively demonstrate a commitment to diversity, sustainability, or technological leadership are more likely to attract mission-driven entrepreneurs. In a crowded market where access to capital is no longer the sole differentiator, reputation can become the decisive factor.

CVCs are leaving value on the table

Building and protecting reputation requires deliberate investment, particularly in strategic communications and stakeholder engagement. But, while 58% of corporate executives acknowledge the need for online reputation management, only 15% take proactive steps to address it, according to a Lloyds of London and KPMG report. For CVCs, this gap represents a missed opportunity.

Strategic communications can reinforce the fund’s value proposition, align messaging with the parent company’s mission, and position the CVC as a thought leader in the market. Meanwhile, effective stakeholder engagement builds trust with regulators, investors and startup founders. Together, these efforts ensure that the CVC is perceived as a responsible, innovative, and forward-thinking partner.

How to protect your reputation

Reputation is often described as a “risk of risks,” highlighting its interconnectedness with other corporate vulnerabilities. Whether from governance failures, ethical lapses, or operational issues, crises can quickly erode trust and diminish value. Research shows that 41% of companies experiencing reputational crises report brand value and revenue losses, while 21% face market capitalisation declines significant enough to destroy value.

“Research shows that 41% of companies experiencing reputational crises report brand value and revenue losses.”

For CVCs, these risks are amplified by their dual responsibility to portfolio companies and parent organisations. A reputational misstep can ripple across the ecosystem, impacting stakeholder relationships and deal flow. To mitigate these risks, CVC leaders must prioritise proactive reputation management, including:

  • Crisis preparedness: Establish clear protocols for responding to potential crises, ensuring swift and transparent communication.
  • Due diligence: Conduct rigorous assessments of portfolio companies to identify and address potential reputational vulnerabilities.
  • Ongoing monitoring: Track shifts in stakeholder sentiment and market dynamics to anticipate and respond to emerging challenges.

Turn reputation into a strategic asset

To fully realise the value of reputation, CVCs must adopt a proactive, life-cycle approach to reputation management. This involves embedding reputation considerations into every stage of the investment process, from deal sourcing to portfolio management. Key actions include:

  • Proactive signal sensing: Monitor stakeholder sentiment and anticipate shifts in market expectations. Early detection of reputational risks enables pre-emptive action.
  • Build resilience: Strengthen internal processes and governance frameworks to reduce the likelihood of crises. Identifying issues early can help communication experts to better establish a narrative that safeguards perception.
  • Enhance brand equity: Invest in activities that build goodwill, such as thought leadership, community engagement, and partnerships with trusted organisations.
  • Empower your portfolio companies: Each company in your portfolio is a risk unless they are trained and managed on how to build their reputation and trust. Empowering them with the necessary toolkits and experience can help them mitigate risk and unlock value.

Prioritise reputation in CVC strategy

Reputation is no longer a passive asset but a cornerstone of competitive advantage in the corporate venture capital landscape. As the market for innovators and disruptors grows increasingly complex, CVCs must recognise the value of reputation in helping them stand out.

CVC funds must stop treating reputation as an afterthought and make it the foundation of their strategy. By investing in reputation through strategic communications, stakeholder engagement and robust governance, you can ensure not only the success of your fund but also its lasting impact on the innovation ecosystem.

Remember, reputation matters, so let’s talk about it and invest in it!

Julio Romo is the founder and CEO of Twofourseven Strategy, an independent international strategy, strategic communications and stakeholder engagement adviser which supports governments, companies and investors.