Corporate Venture © Paul Wetton

Corporate Venturing is the practice of a large company making an investment in a smaller company in a related field.  It’s a way larger businesses can grow their company without actually going through all the hoops and investing all the resources in acquiring another company.

Corporate Venturing provides an alternative method for growing a company. A company can invest in a new product by funding businesses that sell that product without having to hire a management team or create a new product; it’s like creating a business within the venture capital firm.

The company/entrepreneur benefits by gaining increased distrubution of their product through the large corporation.

Reasons for venture capitalists to consider corporate venturing:

• Gives you the chance to diversity.
• Can create relationships with companies that will help the venture firm grow.
• Get access to new technology, customers and research.

There are four ways of doing Corporate Venturing:
• Take a passive position in other businesses (i.e. corporate venture capital)
• Take an active interest in another business.
• Build a new business from scratch.
• Build a new business within the firm with independent managers.

Corporate venture managers must have clear objectives and carefully screen new companies.  They should create a team and have a system for keeping track of the venture.