Corporate Venture Capitalists Flashcards
what is The Corporate venture Fund
An in-house corporate venture fund
The company invests directly in start-up ventures
These are external rather than internal ventures i.e. the venture must be legally independent
What are the CVC objectives?
Strategic Primarily to benefit existing business Synergies envisged Complemetary products Potential alliances identified Customers or suppliers Financial Hope to exploit knowledge of marketor technology Primary return is financial
As outlined by Chesbrough
Perceived benefits of CVC
Visibility V Angels
No pressure to Invest or divest
Technical knowledge
Customers; suppliers; space; operating capabilities
Key Benefits for corporates Access to external resources Small resource commitments Strategic flexibility Possibility of creating a portfolio of start-ups Abandonment deferral and growth options
Perceived disadvantages of CVC
Conflicts of interest
Lack of contracting skills
Lack of search skills
Lack of consistent strategy
Who makes Corporate venture capital Investments
Found by Basu
Firms in Dynamic Industries
High rate of Technological Change
Strategic flexibility
Value of options to develop
Importance of exploring multiple initiatives
Need to avoid fixed commitments option to abandon
Competitive Intensity - need of differentiation, locking customers, increasing margins
Weak appropriability increases technological change and competitiveness
Firms with specific Resources
Technology - capacity and expertise
Marketing - brand and reputation
Past Experience- network, diversity affcts performance
Benefits of having Venture investment for corporates?
Venture capital Investment can provide strategic benefits to corporations. These benefits are greatest in dynamic technological competitive environments. The opportunities are greatest for firms rich in technological, marketing and experiential resources. However, resource rich firms make fewer investments when facing dynamic environments
Basu
