Cia 3 - CVC

CVC –
corporate
venture capital
29.05.23
I’m Dima, Founder of the Corporate
Innovation Academy
– 11 years in corporate innovation

consulting;
– clients: Visa, PepsiCo, Home
Credit Bank, etc;
– corporate innovation courses at
Oxford, Stanford, MIT, Erasmus
University, London Future Academy,
Maryland University, etc.
– Entrepreneur (3 exits), currently
running PitchBob.io – AI Bot for
(internal) entrepreneurs / idea
management
– Based in Israel
Agenda
1. What is CVC
2. What’s going on globally and locally
3. Why corporates run CVC arms
4. What types of CVC exist
5. In what case do you have to launch a CVC
6. How to prepare for the launch
7. How to manage a CVC
8. How do you measure success
9. What mistakes do you have to escape
10. How we can help you
Let’s start from the definition.
Corporate venture capital (CVC) is the investment of

corporate funds directly in external startup companies.[1]
CVC is defined by the Business Dictionary as the "practice

where a large firm takes an equity stake in a small but
innovative or specialist firm, to which it may also provide
management and marketing expertise; the objective is to
gain a specific competitive advantage."[2]
What is the role of corporate
venture capital?
Corporate venture capital allows

companies to take small bets on
innovative companies.
Agenda
1. What is CVC
6. How to structure and measure CVC funds?
7. Why do corporate venture capital funds fail?
8. How to build the pipeline?
Over 200 new CVC, or corporate
venture capital, arms came to market
last year, and collectively, corporate
venturing groups invested a
record $165 billion-plus in 2021.
Agenda
1. What is CVC
This rise has been driven by two factors:
1) the tech landscape is moving at a
faster pace and bigger companies know
they need to innovate quicker to meet
market demand;
2) the number of startups seeking CVC
capital is growing as founders look
beyond traditional venture funds to help
grow their businesses.
What for corporates run CVC arms?
• Access to new technology
• Trend spotting and marketing intelligence
• Commercial relationships
• M&A pipeline
• Launching businesses in new markets
• Customer experience
• New business models
• Talent, recruiting, and training
• Disruptive investing and hedging
• Culture change
• Future proofing the business
• Branding/marketing the corporation as innovative
• Product roadmap
• Cost savings and efficiencies
• Supply chain optimization
• Freedom to operate in a non-regulated environment
Agenda
1. What is CVC
The corporate version of an institutional
venture platform, meaning that they look to
leverage their parent company’s strategic
assets with the goal of scaling their portfolio
and driving real revenue.
As Grant Allen, general partner at SE
Ventures, the CVC arm of Schneider
Electric, says, “this type of CVC looks just
like a pure financial VC, except with a big
company behind them, and the ability to
open up real channel revenue.”
Strategically-minded CVCs are not driven
exclusively by returns, but also value innovation.
These CVCs are looking for outsourced ways to

stay on the leading edge and to learn about new
technology that might benefit their parent
corporation.
This category likely still cares about returns, but

their view on ROI is more nuanced than a
traditional investor.
So-called “tourists” often are made up of
brand new and relatively inexperienced
venture arms of companies that have done
very few deals and haven’t had time to
develop a strong process or dealflow
strategy.
Strategic
A strategic CVC prioritizes investments that
directly support the growth of the parent.
For example, Henkel Ventures is upfront about

its focus on strategic rather than financial
investments. “We don’t see how we can add
value as a financial CVC,” explains Paolo
Bavaj, Henkel’s Head of Corporate Venturing
for Germany.
Financial
CVCs are explicitly driven by maximizing the

returns on their investments. These funds typically
operate much more independently from their
parent companies, and their investment
decisions prioritize financial returns rather than
strategic alignment
Hybrid
The third type of CVC takes a hybrid approach,

prioritizing financial returns while still adding
substantial strategic value to their portfolio
companies.
Agenda
1. What is CVC
How to prepare for the launch
1. Establish Clear Objectives
2. Understand Your Organization’s Risk Profile
3. Give Yourself Enough Time
4. Establish a Realistic Budget
5. Secure Executive Support
6. Decide about your CVC type
7. Decide about the CVC structure
8. Decide about the source of money
Ask yourself
1. Where will this team fit into the organization?
2. What will be the approval process for investment decisions?
3. What will be the initial focus areas and deal profiles
(size/stage/geographies) to be targeted?
4. Will investments require support from business unit leaders?
5. Will investments depend on commercial deals being inked in
parallel with the startup?
6. If all goes according to plan, how do we expect the CVC
group will evolve over time?
Agenda
1. What is CVC
How do you measure success?
• The number of deals in strategic focus areas sourced or evaluated
• Financial impact (i.e., EBITDA or revenue growth) as the result of investing in a startup
• The number of business units engaged in pilots or commercial relationships with portfolio
companies
• Knowledge transferred from the startup investment to the CVC fund (and, subsequently, to
the parent)
• Financial metrics for CVCs can include: Multiple of invested capita, Individual portfolio
company return on investment, Portfolio internal rate of return (IRR) vs corporate, ROIC
(return on invested capital)
• Portfolio IRR vs. median VC fund returns
• Pull-through revenue (i.e., incremental revenue in core business driven by startup and vice
versa)
Legal structure option 1
Single Limited Partner
LLC Subsidiary
Fully Integrated
Agenda
1. What is CVC
Why do corporate venture capital
funds fail?
1. The mission is not well-defined;
2. It doesn’t have full corporate commitment;
3. There is not proper alignment of compensation schemes.
4. Lack of objectives and overall strategy
5. Inexperienced Team
6. No Financial Discipline
7. No Budgets For Follow-on Investments
Agenda
1. What is CVC
Pipeline is a king
If you close five investments,
your team should probably
review at least 500 investment
opportunities.
You Can’t Pick The
Winners Without
Investing in The Losers
Alexander Osterwalder
How we can help you:
1. Prepare, (re)launch, and develop
your CVC arm
2. Run global pipeline startup scouting

for your CVC
3. Become your CVC as a service

partner
Thank you!
Dima Maslennikov
hi@corporateinnovation.academy
Tips
• Before focusing on deal sourcing and deal evaluation, set-up specific goals and KPIs for success of the
overall corporate VC program or fund
• The strategic benefits of corporate VC provide optionality and can provide inputs to drive overall
company strategy
• Goals can be measured in the short or long-term — include both and start with goals measured over a single
year for a new corporate VC program
• Develop the right mix of quantitative (easier to measure) and qualitative goals for your corporation and its
culture
• Make sure the first year strategic goals are achievable, as there may be an expectation to increase the goals
in year two or beyond
• Make sure the executive team buys in on these goals and KPIs
• Review the performance of goals on at least an annual basis, but preferably on a twice per year basis
• Use your goal framework to educate new senior executives who join the company on why you are pursuing
corporate VC and to demonstrate the success you have generated so far
• Financial goals, based on return on investment, should always be positioned as long-term (5+ years)
Sources
• https://techcrunch.com/2020/05/26/how-to-approach-and-work-with-the-3-types-of-corporate-
vcs/
• https://www.toptal.com/finance/venture-capital-consultants/corporate-venture-capital
• https://globalcorporateventuring.com/best-practices-for-starting-and-building-cvc-firms/
• https://www.youtube.com/playlist?list=PLOStnEM8wBOZhBEWbiDc_iMAiFY3EY2p9
• https://hbr.org/2022/07/is-corporate-venture-capital-right-for-your-startup
• https://medium.com/touchdownvc/five-reasons-corporate-venture-capital-programs-fail-
cace36f1191e
• https://medium.com/touchdownvc/measuring-success-in-corporate-venture-capital-
43ee88337988
• https://news.crunchbase.com/venture/corporate-venture-capital-arm-formation-neal-hansch-
silicon-foundry/
• https://medium.com/touchdownvc/five-prerequisites-before-starting-a-corporate-venture-
program-170ee0b9919c

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CVC –

– 11 years in corporate innovation

Corporate venture capital (CVC) is the investment of

CVC is defined by the Business Dictionary as the "practice

Corporate venture capital allows

These CVCs are looking for outsourced ways to

This category likely still cares about returns, but

For example, Henkel Ventures is upfront about

CVCs are explicitly driven by maximizing the

The third type of CVC takes a hybrid approach,

• Portfolio IRR vs. median VC fund returns

2. Run global pipeline startup scouting

3. Become your CVC as a service

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