Risky Business
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Risky Business

Many Happy Returns

How Corporate VCs Find More Ways to Score

1. Financial Returns

Just as offensive touchdowns are the primary scoring plays in football, the financial returns generated by increases in equity value are the clear metric for success in venture capital. This applies to institutional VCs and corporate investors alike. There are two ways to generate a touchdown on offense in football: running plays and passing plays. And in venture capital, there are two ways to generate a return on an equity investment: selling the company or taking it public. In venture capital, the “number of points” generated by the score is measured as a multiple on investment or by an annualized rate of return.

2. Commercial Deals

Business development deals and strategic partnerships are examples of commercial relationships that provide another way for corporate investors to put points on the board. As Touchdown co-founder Scott Lenet notes in the blog “Bending Bullets,” these deals can include technology licensing, supply chain collaborations, distribution or reseller agreements, co-marketing arrangements, and even straightforward vendor relationships. Most corporations have dedicated teams focused on building relationships with startups, but the venture capital team can potentially help because we meet so many startups. Importantly, the corporate venture capital process can produce these commercial deals whether or not an investment occurs. Sometimes, a successful business development deal can lead to an investment later.

3. M&A

Mergers and acquisitions present yet another way for corporate investors to generate a return from venture capital. As is the case with business development, most corporations have dedicated teams focused on acquiring startups. The venture capital team can augment this group’s capabilities as well.

4. Market Intelligence

Good corporate VCs review hundreds or thousands of investment opportunities per year, talk with key business unit leaders frequently, and share updates on key market trends. These trends may apply directly to the core business or illuminate future opportunities or existential threats. The company can potentially refine its strategies based on this intelligence.

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Thoughts on corporate VC from the team at Touchdown Ventures, the leading provider of managed venture capital for corporations.

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Eric Budin

ManagingDirector at Touchdown Ventures…interests in innovation, start-ups, travel, social justice, food and sports (Michigan/Philly)…father of two teenage girls