How a Corporate VC Compares to a Traditional VC

How a Corporate VC Compares to a Traditional VC

June 1, 2021 by investor

Overall, corporate VCs invest more than traditional VCs by about 2%.

Corporate VCs operate the same as traditional VCs with some exceptions:

– Corporate VCs seek a strategic advantage rather than a financial return
– Many don’t lead funding rounds but only follow them
– They bring strategic support to the startup such as sales channels and industry partnerships
– They focus on early to mid-stage companies primarily and avoid seed-stage startups
– They invest based on the current strength of the corporation and don’t follow the traditional raise-a-fund-and-deploy-it cycle
– They don’t exert substantial control over the company, compared to traditional VCs who seek a financial return in a specific timeframe
– They don’t look for a strong financial return as the only exit option
– Corporate VCs are measured by the impact of the investment into the startup, such as the number of pilots and programs, rather than startup sales growth
– They don’t limit their investment horizon to the 10-ear fund cycle as a traditional VC does
– Corporate VCs access deals primarily through their partnerships rather than the general market

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.