Transforming an idea into a viable solution; takes time and skill. Choosing the right investor that will create a leverage effect investor is crucial.
The suitable investor varies with the stage and specific needs of the startup.
Corporate venture capital investors are one of those leverage creators for B2B startups.
Corporate Venture Capital (CVC)
Corporate venture capitals enable companies to buy shares from startups.
It helps companies that want to differentiate themselves from the competition by creating new revenue streams and/or testing new strategically important markets, business models, and technologies through startup investments.
We can divide CVC startup collaborations into two. Strategic investments and financial investments.
Strategic Investments
Strategic investments target long-term gains rather than rapid growth potential.
Most corporate venture capital firms aim for strategic investments. Because it helps the main company share the risk of testing new markets, technologies, and business models with startups.
For corporate venture capital to make strategic investments, the company requires a specific innovation strategy, innovation assets, processes, and a dedicated workforce that works in harmony with it.
They need such a strategic lineup for a very meaningful reason. To update the core corporate value proposition with the new market, business model, or technology unlocked by the invested startup.
Strategic investments offer startups more than just cash flow. Access to industry expertise, distribution channels, and acquisition potential, accelerates growth and increases impact.
This can help startups scale faster.
There is a very significant reason why the most active strategic corporate venture capitals belong to tech companies like Microsoft, Intel Capital, Salesforce Ventures, and Google Ventures. Because they are interested in the new technology developed by the startup. By this strategic investment, they want to be in a position to purchase it if it proves potential.
Financial Investments
Financial investors look for growth potential. They provide capital to promising startups with high growth potential, often in line with industry trends.
The financial investment goal is to maximize financial returns over a certain period, rather than devoting effort and resources to the development of the startup.
For this, market opportunity, product performance, team, and, most importantly, exit potential are prioritized.
If you've validated your product and need to scale very quickly, a corporate VC focused on financial returns may be a better choice.
CVCs that make financial investments can offer fast, flexible financing with fewer strings attached than traditional VC firms. They often focus on specific technologies or markets and potentially lead to stronger strategic partnerships and integration opportunities with established companies, increasing the startup's growth and potential chances of exit.
Corporate Venture Capital Sucess Stories
Google Ventures: A Strategic Investment in Nest Labs: Google Ventures made its first investment in Nest Labs in 2011, with a $50 million investment tour. This investment was an important turning point for both companies. Google Ventures saw Nest's potential to disrupt the home automation market with innovative products. Following the investment, Nest Labs products were integrated with the Google ecosystem, including Google Assistant and the smart home platform. The partnership allowed Nest to leverage Google's resources and reach, further accelerating its growth and market dominance. Google Ventures' parent company, Google, acquired Nest Labs in 2014 for a staggering $3.2 billion.
Toyota AI Ventures and Joby Aviation: Pioneering the Urban Air Transportation Market: Joby Aviation develops electric vertical takeoff and landing (eVTOL) aircraft focused on air taxi service. Following the initial investment made by Toyota Ventures in 2017, Toyota Motor Corporation made another investment of $44 million in Joby Aviation in 2018. 12 months later, it became a strategic partner of the startup with an additional investment of $350 million. The strategic partnership with Toyota provided the startup with much more than financial support. The startup team worked directly with teams of Toyota engineers to plan aircraft production, design parts, and improve efficiency. By collaborating on numerous joint projects, Toyota and Joby Aviation teams were able to create technology and a collaborative culture. They aim to soon be able to produce at scale in the sustainable urban air mobility market.
Turkish CVCs
As of April 2023, according to Startupwatch data, the number of CVCs has reached 75.
Turkish corporate venture capitals have managed to create a diverse investment portfolio, ranging from Far East R&D funds to climate technologies, sustainability solutions, and deep technology funds.
Turkish companies investing with venture capital arms have expertise in agriculture, financial solutions, textile, tourism, construction, industrial solutions, and mobility.
Making strategic investments and co-developing with startups, update and renew the main value proposition of the companies. This requires cultural change and time.
Workinlot is trying to accelerate this transition with the workforce and methodology it offers to companies. (Workinlot Corporate Innovation Services)
We recommend B2B startup founders take into account these facts when choosing a corporate venture capital partner.
We have completed many PoCs (Proof of Concept) for the past 8 years between corporations and startups, leading to $22 million in investments for the startups.
The corporate network and expertise we developed, enabled us to reach over 100 companies while helping startups to commercialize, productize and receive investment.
If you have a startup that has launched a product and is looking for market fit and investments, we want to get to know you. Workinlot PoC Labs