How to Set Up a Corporate VC

How to Set Up a Corporate VC

June 2, 2021 by investor

Corporate VCs follow the startup cycle with many launching their programs at the peak of the cycle.

Most Corporate VCs last about 4 to 6 years, at which point the economic cycle creates a challenging environment for the company.

To be successful at running a corporate VC, you’ll need to do the following:

Set goals that are aligned with the corporation.

Are you doing research, learning from the market trends, or driving acquisitions? A
re you pursuing a financial return or a strategic one? If pursuing a strategic one, determine the KPIs you’ll use to measure success.

Decide what stage company you want to pursue as there’s a big difference between early and late-stage companies with respect to sourcing the deals and controlling the outcome.

Startup investing is typically a long-term investment with a 7 to 10-year horizon.

You’ll need to make sure the management team and company can commit to that timeframe.

Understand the cultural differences between a multi-decade old company and a six-month-old startup.

Sourcing deals can be a challenge if you don’t have connections in the startup world.

Managing a startup is different from managing a business unit in the company. The needs of a startup are entrepreneurial and don’t necessarily fit into the company’s current support set. Make sure you incentivize the management team properly for the fund as they can find more lucrative jobs in the VC space.

Finally, set up a dedicated fund for the process so you can support the portfolio with follow on rounds. 

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Copyright (c) 2021, Hall Martin and All rights reserved.

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.