Harvard Business Review article explores pros and cons of corporate venture capital
The headline reads as follows: “Is corporate venture capital right for your start-up?” Three individuals have collaborated in a just published article in the Harvard Business Review that seeks to answer the question.
They note that start-ups traditionally have looked to three primary sources for funding: venture capital firms (VCs), angel investors, and family offices. But in recent years, a fourth option has grown increasingly popular: corporate venture capital funds (CVCs), and the number of firms in that category grew more than six-fold between 2010 and 2020.
Corporate investors offer not only funding, but also access to resources such as subsidiaries that can serve as market validators and customers, marketing and development support, and a credible existing brand. However, alongside this added value, the authors note that CVCs can also come with some risk.
The article describes the types of CVCs and offers three questions to help answer the question.