Comment from Song Ma, assistant professor of finance, Yale School of Management
As opposed to producing innovation internally through research and development (R&D) or purchasing external innovation through mergers and acquisitions (M&A), corporations create corporate venture capital (CVC) divisions to make systematic minority equity investments in early-stage entrepreneurial ventures. Consider, for example, GM Ventures, the CVC unit initiated by General Motors in 2010. On behalf of General Motors, GM Ventures invested in dozens of auto-related technological startups, including automotive cleantech, advanced materials, among other fields, through minority equity stakes. The case of…
