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The Ongoing Growth of Corporate Venture Capital and What it Means

Digital technology keeps redrawing industry maps, and incumbents can’t rely on internal R&D alone to stay relevant. Corporate venture-capital (CVC) units give established firms a “window on the future” by putting minority stakes into promising start-ups that sit on the edge of tomorrow’s markets. CVC investors routinely explore opportunities with the aim of funding a broad array of disruptive technologies and playing a major role in fuelling a startup-based economy. In 2024, and despite the well-known geopolitical tensions and economic uncertainties, global venture capital investment rose to $368.3 billion, up from $349.4 billion in 2023. In 2022, we saw 101 new CVC units launched, a number nearly five times greater than the CVC 22 units launched a decade ago in 2012. But why does the attention go to CVC instead of traditional VC firms? The answer can be as simple as what we all think. The disruptor (startup) can be a liability for the incumbent when it is outside, but an important asset when it is inside.


The Ongoing Growth of Corporate Venture Capital
Figure 1. New CVC units launched in the period 2011-2022. Source: https://globalventuring.com/corporate/corporate-investors-2022-deal-numbers/

How CVCs create value and why it is different from traditional VCs

Independent VCs chase the highest possible financial return, while corporates add a second goal: strategic learning. Recent analysis of 664 life-science start-ups found that when entrepreneurs emphasized the “disruptive” potential of their technology, independent VCs reduced the size of their cheques, while CVCs followed a Goldilocks curve (see Figure 2).[i] In simple words, moderate disruption attracted more money, but extreme claims made by startups cooled interest. Why? While too little disruption is boring and of limited interest, too much of it is hard for a corporate parent to absorb. CVC managers, therefore, look for a “sweet spot” where the parent can learn and partner, yet at a level where the risk remains manageable.



The Ongoing Growth of Corporate Venture Capital
Figure 2. Linear and inverted U-shape relationship between VC and CVC investments. Source: Piazza et al. (2023)

Evidence that the model is scaling

A large-scale study of the five most active CVCs (Google Ventures, Intel Capital, Baidu Ventures, Legend Capital and Salesforce Ventures) showed a strong positive link between the number of deals they sign and the size of the cheques they write (correlation = 0.91).[i] Simply put, the more opportunities these CVC units find, the more cash they deploy, especially in internet, mobile, AI, and cyber-security plays. And the appetite is spreading. An EY CEO pulse survey reported that 93% of chief executives planned to maintain or increase their CVC budgets in 2024, confirming that venture investing has become a mainstream strategic tool.

 

2024 in the real world: Headline deals you should know

  • Cathay Innovation with a $1 billion AI fund. Backed by Sanofi, TotalEnergies and BNP Paribas, the Paris-based CVC launched the largest European AI vehicle to date, signalling that deep-tech bets are no longer a Silicon-Valley monopoly.[ii]

  • Nvidia with a $1 billion across 50 AI rounds. The chipmaker’s venture arm even acquired Israeli platform Run:AI, using CVC not just for minority stakes but for pipeline M&A.[iii]

  • Vale Ventures with an electrified-furnace start-up. Brazilian mining group Vale wrote a strategic ticket into industrial heat tech to decarbonise its own operations.[iv]

 

These deals show how CVC money is moving from “nice-to-have” related bets to core-business enablers. AI for chip makers, green tech for miners, platform plays for digital incumbents.

 

What the academic research tells practitioners

Academic work offers valuable lessons for managers leading a CVC unit. First, scale really does matter: a large enough deal pipeline gives you the confidence and the data to write larger cheques, and that bundle tends to lift overall returns. At the same time, studies find what researchers call a “Goldilocks” pattern in how corporates price disruption: ideas that feel moderately novel attract the biggest tickets because they are exciting yet still digestible for the parent firm. Startups that promise change so quickly and radically to the CVC that backed them often see those same cheques shrink.

Where you invest, and how those bets fit your strategy, matter just as much as cheque size. CVCs embedded in dense innovation hubs, that is, places where suppliers, talent, and would-be partners rub shoulders, enjoy faster learning loops and better access to follow-on opportunities. But the numbers alone cannot drive decisions. When a venture threatens to cannibalize the parent’s core or drifts too far from its strategic direction, even the most impressive spreadsheet will not save the deal. Successful CVC leaders, therefore, balance financials with a thorough examination of fit and timing, ensuring every investment can create real growth options without undermining the core business.


Design principles for an effective CVC programme

To achieve success, it is essential to clarify the mission and determine whether the primary goal is focused on growth options, technology scouting, or outright acquisition; mixed signals can dilute impact. While units should be given freedom, it is crucial not to allow too much distance, as studies show that when radical ideas are too close to the parent, antibodies appear. On the other hand, if they are too far away, learning can evaporate. It's important to measure both strategic and financial KPIs, utilizing a dual scorecard, such as tech licenses signed and internal rate of return (IRR), to make sure that executives are kept engaged beyond mere headline valuations. Planning for exits from day one is vital, as many corporate parents stumble when a portfolio company exceeds its minority status. Rules need to be established for follow-ons, acquisitions, or clean sell-downs. Finally, resourcing the interface is critical, as holding a venture stake is only the beginning. Partnership managers, integration teams, and sandbox pilots are necessary to convert ownership into a competitive advantage.

 

Looking forward

Digitalisation is rapidly breaking down industry barriers and creating new opportunities while destroying long-successful business models. Faced with this churn, CVC has moved from experiment to necessity. The model lets corporations buy real-time market intelligence, real growth options, and technology hedges at a fraction of the cost of full-blown acquisitions. Yet the tool is only as good as its wielders. The most successful CVCs combine venture-style speed with corporate-grade discipline, treating each investment as both a learning journey and a financial asset. For executives willing to embrace that mindset, corporate venturing offers a pragmatic route to ride, rather than resist, the next wave of disruption.


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