Are you a corporate executive or an angel investor looking to leverage innovation during times of crisis? In the 13th episode of our monthly webinar series, Business Angels Talks, Jorge Martínez-Arroyo, Angel Leader of COREangels Enterprisetech, shared his expertise on Low-Cost Corporate Venture Capital (CVC) and how it can make a significant difference for your company's growth and success. In this article, we'll delve into the main ideas behind Jorge's presentation and explore how you can implement low-cost CVC in your own business.
The Power of Innovation in Crisis
While everyone talks about innovation in regular days, its impact becomes even more significant during crises. In a data shared from McKinsey, 74% of companies exit a crisis in an equal or weaker position than before, while only 9% emerge stronger, and 17% do not survive. The presentation highlighted that innovation can help your business not just survive but thrive during challenging times.
Introduction to Corporate Venture Capital (CVC)
Corporate Venture Capital (CVC) is a powerful tool that allows corporations to invest in startups or scale-ups by acquiring a minority stake (usually below 20%). The objective is to gain access to new technologies, markets, and business models to drive growth, financial returns, and strategic benefits.
Understanding Low-Cost Corporate Venture Capital
Low-cost CVC is a unique approach that aims to achieve significant results with much lower investment and risk. Jorge proposed leveraging a model, which involves developing a corporate venture capital form with different angels of the same industry. This model harnesses collective know-how and resources to reduce costs while maximizing impact.
The Challenges of Corporate and Startup Collaboration
The webinar also touched on the challenges of collaboration between corporations and startups. Corporations are risk-averse and have strict processes, while startups are agile and innovative but may lack resources. Successfully bringing these two worlds together requires understanding each other's goals, overcoming cultural differences, and finding ways to work together effectively.
Implementing Low-Cost CVC in Your Business
If you're considering low-cost CVC for your business, here are some steps to get started:
- Define Clear Goals, Determine your objectives and KPIs for the CVC initiative. Are you looking to defend your current position or explore new revenue streams? Define your strategies accordingly.
- Choose the Right Vehicle, Select the appropriate CVC vehicle based on the time to impact and level of involvement you desire. Options include venture builders, strategic partnerships, accelerators, and more.
- Build Relationships, Cultivate relationships with startups that align with your business goals. Focus on startups with innovative technologies and growth potential.
- Invest Smartly, Invest in startups at different stages, considering both potential growth and financial returns. Be patient with early-stage investments, as their impact may take longer to realize.
- Leverage Industry Networks, Collaborate with other angels or investors within your industry to pool resources and knowledge, reducing costs and risks.
- Establish Clear Communication, Foster open communication between your corporation and the startups you invest in. Transparency and collaboration are key to successful partnerships.
In times of crisis, innovation becomes even more critical for a corporation's survival and growth. By embracing low-cost Corporate Venture Capital, your business can access new technologies, markets, and revenue streams, maximizing your chances of success. Collaborating with startups may present challenges, but with the right approach, it can be a game-changer for your company's future.
This article is written inspired by a talk by Jorge Martínez-Arroyo, Leader of COREangels EnterpriseTech, during a 2023 Business Angels Talks. Business Angels Talks are monthly online webinars for angel investors.