Need for Speed: CVC as Innovation Tool

Source: An entrepreneur’s guide to the venture capital galaxy by Dirk de Clercq, Vance H. Fried, Oskari Lehtonen and Harry J. Sapienza
  • Innovation: To improve products and services, processes and even business models; for example, cable TV vs streaming platforms
  • Fill gaps: In their organizational capacities that allow them to cope with market changes; for example, direct distribution to consumers with their own fleet or using the gig economy
  • Boost growth in new markets: Accelerate the organization’s growth thesis; for example, traditional commerce vs e-commerce
  • Move faster than only with its internal capacities: Seek the generation, implementation, execution and strategies and projects strengthening the organization; for example, traditional banking vs neo-banks
  • Learn and be aware of emerging trends in technology, innovation and business: Traditional organizations lose sight of the long term by focusing on quarterly reports to their shareholders and the public markets
  • Increase its M&A strategy: Companies like Google, Facebook, Goldman Sachs are a benchmark in acquiring innovation through purchases
  • In-house: Internalized team that carries out VC activities. It usually operates as an internal area of ​​the organization, which makes it difficult and lengthens the decision-making process when investing. You can have an established capital commitment or make ad-hoc investments
  • Outsourced: Investments through an independent team that can be dedicated or can have multiple corporations as LPs. Retains the agility and structural discipline that an independent VC fund has
Source: EY
  • Speed ​​and agility: Eliminating bureaucracy, facilitating decision-making and promoting empowerment are essential.
  • Financial and strategic returns: Have a long-term vision measuring results and seeking added value to the organization’s strategy.
  • Compensation: Adequately incentivize CVC members with structures that equate to an independent VC fund.
  • Professional development: VC activity is a profession itself that requires knowledge, experience and networks to be able to develop at the highest level and it is not a position as other where people can be rotating within the organization.
  • Knowledge and expertise: To be a competitive CVC in international markets, it is necessary to adapt the best market practices and have an experienced team.
  • Conflicts of interest: Without an experienced and independent team, organizations promote transactions that do not make sense and also lead to confrontations of power and politics within the organization and with the entrepreneurs and other VC funds.
  • Capital markets: Do not pay a premium to the valuation of companies for having a CVC.
  • Visibility in innovation and trends: Organizations do not need to invest to be able to have this experience, there are other tools that provide innovation within the organization.

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ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.

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ACV

ACV

ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.

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