How to identify the right startup for your Corporate VC?
This week I was fortunate to attend and support CVC Startup Summit taking place in Zurich and organised by Corporate Startup Summit . 2 days event full of inspiring panels and mind breaking workshops focused particularly on Corporate Venture Capital. It’s a special VC structure which exist within the corporate entity and in case you love VC business but feel like working in a huge, global corporation it may be a solution worth considering while screening for the VC job. Corporate VC has quite different approach to the investments, startup screening, vision of the cooperation so it was extremely valuable to listen and get more familiar with this specific way of cooperation with startups.
How then corporate venture funds identify the right startup to work with? How the process looks like and what is most important while structuring the agreement?
If there is open call application process in place (all startups can apply to be screened) you end up with hundreds of early stage entrepreneurs or even just an ideas people have in mind. If there is no criteria that must be met by the potential applicants but open to all you may expect a lot of work to be done to eventually get to the few that may be prospective successful match. To save some time in here, many times the deal flow sourcing is just outsourced, and let specialised company to do this initial process, or stay internally but is digitized. AI, algorithms can give you back hours you would spend reading all applications otherwise. Some applications are disregarded already at the very beginning. The evaluation stage focused only on the remaining 20% or even less. It’s not because the startup ideas of the rejected 80% is not interesting it just does not match the specific needs of this particular company’s development strategy.
Setting up reasonable criteria to have unique requirements for each company or your internal departments is crucial. You need to know what you are looking for and in corporate VC is not a unicorn at all. The company, having billions of revenue, would need to have like 2 unicorns per year to have any impact on the financials. Setting up the CVC has completely different goal. It’s to catch up with the market on the innovations and technology. It’s to integrate the new ideas, tools and develop existing services, improve them or replace with the more efficient. IT’s to find fit to the particular infrastructure. To hedge the existing structure with a possible new services.
In this case you need to do the search carefully and wisely and always keep in mind the company strategy and vision. So maybe the targeted scouting would be better way to spend money instead of marketing to open call offer and then checking all these hundreds applications? It’s to be considered by each entity individually.
Hunting process is intense and require a lot of interactions.
The existing data bases are not always the best idea. Go to the market, make qualified list, contact people and talk to them. Be more creative and proactive. Do not rely entirely on crunchbase and commonly available, public databases. Use your network and your intuition.
Tip for startups: if you pitch to 20 accelerators, then probably you do not really know what you want. You do not have strategy and it’s not really well perceived.
Proactive outreach is better than companies being begging startups to come to them so feel free to initiate contact and propose the way you can cooperate with the market representatives you are particularly interested in.
Working with startups is really challenging but greatly rewarding job. I do not think of money but about satisfaction you have watching development of the company you discovered, walked by hand step by step to the market and let it grow exponentially in line with the vision of the founder. It’s either with traditional VC which I’m personally more into or within the corporate in variety of markets. Feel free to share your success stories or some lesson learned you have in mind! Share your experience with others and support entre/intrapreneurship!
Originally published on my website: www.InvestingInPassion.com