Corporate venture firms are staying the course on investing, even as asset managers, private equity firms and others are taking a more cautious approach, according to the latest PitchBook-NVCA Venture Monitor.
Better known as CVCs, corporate funds have participated in more than a quarter of the U.S. venture deals deals in 2022, the highest rate this decade. Meanwhile, the participation rate for all other kinds of nontraditional investors has fallen.
In recent years, the latest report says that corporates have cast aside their reputation as “tourist” investors, a term that implies a tendency to flee in difficult markets, and are increasingly seen as a core source of venture capital. Three in four CVC leaders don’t anticipate a pullback in investment activity, according to a recent survey by Silicon Valley Bank and Counterpart Ventures.
It was also noted that corporate venture capital tends to invest earlier than other types of nontraditional investors, and those early stage deals are less affected by stock market gyrations. Still, rising interest rates will put pressure on balance sheets, thus affecting the cash available to CVCs that don’t invest out of dedicated funds.