The main goal of CVC is to gain a competitive advantage and/or access to new, innovative companies that may become potential competitors in the future. CVC does not use third-party investment firms and does not own the startup companies it is investing in – as compared to pure Venture Capital investments.
Correspondingly, what are the benefits of corporate venturing?
Firms gain significant benefits from corporate venturing, so its growth as a strategy is almost predictable. Corporate venture capital supports firm innovation, drives up firm value, and provides management with tools to identify emerging trends in advanced technology.
Accordingly, why do corporate venture capital funds fail?
The main reason for the failure of CVC is a simultaneous focus on long term strategic goals and immediate financial returns. … The exit focus, however, always aims for financial returns via sales of shares. In this case, from a strategic point of view, the interest in the new business model is lost.