Corporate venture capital is venture funding from a company, rather than a fund raised from limited partners.
Most corporate venture capital invests for strategic reasons rather than financial ones.
Reasons for corporations to invest in startups include the following:
– Gain market insight through their startup portfolio companies – many companies want a front-row seat on how an emerging market is developing.
– Access to new research and business models – this can support research and development as well as business development.
– Provide a flow of new customers for the corporate investor – investing in companies gives the corporate VC leverage for selling their products.
– Identify new talent for future projects in the space – as the market matures, the corporate VC may want to enter the market with their own products, and having the talent to build and sell those products can be quite valuable.
– Build a relationship with potential acquisition targets – some corporations use M&A to gain access to a market and investing in early-stage companies is one path to acquisition.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today.
Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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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.