Corporate venture capital (CVC) has become an increasingly popular way for established companies to invest in promising startups and emerging technologies. In recent years, the value and benefits of CVC have been further reinforced by a number of high-profile success stories and industry trends.
One of the most notable examples of successful CVC in recent years is SoftBank’s Vision Fund. Launched in 2017 with a $100 billion investment from SoftBank and other partners, the Vision Fund has made significant investments in a number of high-profile startups, including Uber, WeWork, and Slack. While the Vision Fund has faced some setbacks, including WeWork’s failed IPO and the COVID-19 pandemic’s impact on ride-sharing services, its overall performance has been impressive. As of 2021, the Vision Fund had returned more than $35 billion to investors, representing a significant return on investment.
Another notable trend in CVC has been the increasing involvement of traditional financial services firms. Banks and insurance companies, in particular, have become more active in CVC, as they seek to stay competitive in an increasingly digital and tech-driven marketplace. According to a 2020 report from CB Insights, financial services companies were the second-largest group of CVC investors, behind only technology firms.
In addition to financial services, CVC has also become increasingly important in the healthcare industry. With the COVID-19 pandemic highlighting the importance of innovative healthcare solutions, many established healthcare companies have turned to CVC to invest in startups and emerging technologies. For example, pharmaceutical giant Pfizer launched a CVC arm in 2020, with the goal of investing in startups and technologies that could help accelerate the development of new treatments and vaccines.
Beyond these specific examples, there are a number of broader benefits and value to CVC that have become increasingly apparent in recent years. For one, CVC can be a valuable way for established companies to stay ahead of the curve when it comes to emerging technologies and market trends. By investing in startups and emerging technologies, established firms can gain access to new ideas, business models, and technologies that they may not have been able to develop on their own.
CVC can also be a valuable way for established companies to diversify their revenue streams and explore new business models. By investing in startups and emerging technologies that are aligned with their strategic objectives, established firms can create new opportunities for growth and innovation, even as they continue to focus on their core business.
Perhaps most importantly, CVC can be a valuable way for established companies to foster a culture of innovation and entrepreneurship within their own organizations. By investing in startups and emerging technologies, established firms can encourage employees to think outside the box and embrace new ideas, even as they continue to focus on their core business.
Of course, there are risks associated with CVC as well, including the potential for investments to underperform or fail altogether. However, with the right strategy and approach, CVC can be a valuable way for established companies to stay competitive, drive innovation, and create new opportunities for growth and success. As we look ahead to the future, it seems likely that CVC will continue to play an increasingly important role in the corporate landscape, as companies seek to navigate an ever-changing business environment and stay ahead of the curve.