TLDR:
- Corporate venture capital (CVC) is crucial for innovation in large companies.
- Many CVC initiatives fail due to lack of understanding in how they should be designed, monitored, and evaluated.
In a study conducted by Ilya A. Strebulaev and Amanda Wang, factors in the success or failure of corporate venture capital initiatives were investigated. 164 CVC unit leaders were interviewed to understand their setup, financing, governance, relationships with corporate parents, decision-making processes, and team compensation. CVCs are one of three main innovation mechanisms deployed by large companies, along with internal R&D and innovation M&As. Global CVCs invested nearly $100 billion in 2022, but many fail to accomplish their objectives and often do not survive leadership changes. A third of all active CVCs were closed or slowed down in the past three years. Companies must understand how to design, monitor, and evaluate their CVCs to ensure success in corporate innovation and CVC strategies. The study shed light on the chaotic world of CVCs, providing insights on decision-making processes and success factors in CVC initiatives.
The research conducted by Strebulaev and Wang aims to help companies thrive in the realm of corporate venture capital. The study provides valuable insights into how CVCs should be designed, monitored, and evaluated, offering a roadmap for success in innovation and growth within large corporations.
