The Art of Corporate Venture

Corporate investors must make long-term bets amid shifting strategy, policy and market hype. The challenge is maintaining conviction without losing sight of what matters.

With 36 Blue Cross Blue Shield healthcare companies as limited partners, Blue Venture Fund manages a complex set of stakeholders. Head of fund John Banta has created a robust operational machinery and a cast-iron investment focus to make this work.

CVCs often measure the financial side of their portfolios rigorously, but strategic value can be harder to track. The missing piece is building strategic impact into the same routines used to review financial performance.

Strategic value often stops being tracked systematically after the funding round is done. TechNexus built a scoring tool that keeps it part of the ongoing portfolio reviews.

It can be hard to build a career track record in corporate venture when units can be shut down prematurely and the pace of investing may be slow.

Oxford researcher Susanna Kislenko argues investors need to look beyond financial metrics and assess founders as a source of ongoing leadership risk.

Allstate Strategic Ventures invests from the corporate balance sheet and doesn't back a startup unless there is a clear use case for it with a business unit. These features mean the unit's alignment with the corporation has never been a problem.

But perhaps some of the $22trn on corporate balance sheets will.

Bigger is not always better in CVC. As venture units enter the expansion phase, staying lean can help teams maintain strategic alignment and focus on making existing investments work.

After the first three years, corporate venture units come under pressure to demonstrate tangible value. Here's where contacts in the business, investing in portfolio management, internal messaging and pacing become critical.

Investing in other funds can give a CVC team more reach and resilience, but it is critical to pick managers who understand what corporate LPs need.