Corporate venture capital has been an excellent way for many companies to increase shareholder value. Research shows 30% better increase of share value with companies with strong Corporate Venture capital activities. And if you look for example at the biggest Chinese giants, most of that valuation increase is because of good investments, not operative business.
But it’s usually done only with later-stage companies.
Many corporations have a very profitable business, but visibility to the future is getting shorter every year. Earlier-stage companies have the newest ideas and willingness to adapt according to your objectives. So, it’s time to get engaged also with earlier-stage companies.
Working with startups
Working together with startups is the most effective way to become ready for the unknown future. And to learn how to work with startups, you only learn by working with them. And then you’ll also learn to work like them.
The challenge is: how can you work with them? Can you renew your organization to treat startups like equal partners? Can you support them with the right facts?
If you can support them effectively they can deliver new products that are close to customers, much faster, with iteration. As Boston Consulting Group says, successful corporations are already reaping the benefits of their venture investments opening up new markets with innovations originally developed by their portfolio companies.
Large corporations know how to do business today and they could also leverage startups’ business. Make them scale faster: scaling with your organization may be the thing for the startup to become really valuable. And you should take your share of that. Not only of the business they do with you, but also for the business outside your scope. And that’s only possible when you invest in them. True win-win.
You’ve seen it work with later-stage companies. But could it also work with early-stage startups?
In order to discuss why and how to invest in early-stage companies, we have partnered with Mawsonia and Helsinki Business Hub to create an official Slush side event: Corporate Venture Capital. Register now here, we have very limited seats.