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refers to operating corporations, as distinguished from venture capital firms, that invest money in growing companies. Many corporate venture capital funds are set up as separate subsidiaries that control a budget dedicated to making venture investments. Others operate as divisions without a committed capital budget. Whatever the form, these corporations typically focus their investments, like specialty funds, on companies within certain industries or on certain types of technologies with which they are familiar. Corporate venture companies evaluate investment proposals in much the same way as do traditional venture capitalists. They conduct extensive due diligence and look for a high rate of return from their investment. In addition, corporate venture capital funds frequently look for companies and products that can fill a market niche their parent corporation wants to enter or that can develop technology the parent needs. Corporate venture capitalists can make good partners for growing companies, especially for those with good products who need assistance the corporate partner can provide in getting those products to market. Often, the corporate partner can lend its marketing expertise and give the company access to distribution channels that accelerate its growth. Sometimes a corporate partner can lend technological assistance to a company as well. Because they are often able to provide some specific strategic assistance, managements should explore the additional "value added" the corporate investor can bring to the table and contract in the financing agreement for those investor services the company needs. See: Joint Ventures, Specialty Funds, Value Added, Venture Capitalists. |
