While corporates and ventures need each other more than ever, M&A is no longer the exclusive recipe for success. A smart approach is needed to preserve the venture culture on the one hand and to optimally benefit from corporate infrastructure and platforms. This is why we see the return of corporate venturing.
In the late nineties, corporate venturing came into existence as corporate leaders realized that technology bets became too risky. Through corporate venturing, business leaders created an instrument to hedge their technology choices. The consequence of investing pockets of venture capital in early stage start-ups was that corporate venturing stood at a far distance from the core business …
In the last decade, a new corporate venturing approach is emerging. Rather than hedging technology choices, corporate venturing has returned to facilitate innovation and business development in the core business itself and its adjacencies. Establishing a ‘business partnership’ is the main priority of corporate venturing. The equity investment is no more than an instrument to strengthen the partnership and to capture the value creation as a result of that.
Developing the edges of your business is the most heard goal of corporate venturing. To cope with the need for innovation and new business opportunities, corporate venturing and partnership creation are high priority areas at corporations. Corporate venturing drives connectedness between the corporation and the ecosystem. However, successful ecosystem strategies require the core-operating model of your company to adapt to the three building blocks: ‘Employee mobility’; ‘Scaling the core through moon shot thinking and living the purpose’; and ‘Developing platforms and interfaces’. Only then corporate venturing will enable the development of new business on the edges of the core activities of today. In other words, aspirational ecosystem players should not only use corporate venturing to develop the edges of the business, it demands the core business to adapt to the needs of an ecosystem as well.