Cover photo by Andrea Piacquadio

 

 Startups offer companies the opportunity to partner in new product/new customer/new market endeavors.

Because often the work in these areas is incompatible with the financial feasibility with which companies manage their daily operations. 

To fund collaboratively created but risky ventures for corporate feasibility, companies establish corporate venture capital.

Corporate venture capital (CVCs) are structures that enable companies to acquire shares in ventures with their capital.

Corporate Venture Capital - Global Situation

According to Silicon Valley Bank's 2024 report, three different player profiles stand out in the CVC ecosystem: ( The State of Corporate Venture Capital

2024 Report )

• Strategically focused funds with 47%
• Funds adopting a hybrid approach at 38% 
• Funds focused entirely on financial returns at 15%

This distribution shows that corporate capital still primarily pursues the strategic interests of the parent company, but financial motivation is also becoming increasingly important.

There's a noticeable slowdown in the pace of CVC investments—38% of funds made fewer than five investments in the past year. This was down from 25% in 2022. Despite this, CVCs still account for 28-30% of total VC deals, representing a historically high participation rate. This may indicate that:

1. Experienced CVCs are being more cautious and selective, investing less 
2. CVCs are involved in 28-30% of total VC deals, indicating that CVCs are now choosing to invest in consortia with other VCs rather than investing alone.
3. This behavior suggests that CVCs collaborate with other investors to share risk, pool resources, and validate the valuation of startups.
4. One consequence of this is that while CVCs are investing less on their own, they maintain their influence in the VC ecosystem.

Investment Focus

Artificial Intelligence and Technological Focus

AI solutions are the biggest focus in CVC investments. 37% of CVC-backed funding and 21% of deals go to AI companies. Investments in AI companies have increased by 13% compared to 2023.

Early Stage Investments Take the Spotlight

Early-stage deals (seed, Series A, and B) account for 65% of CVC-backed investments. According to a Silicon Valley Bank report, this percentage is even higher at 86%. CVCs' increasing focus on early-stage companies is driven by a strategy to discover new market opportunities early and gain a competitive advantage.

Investment Examples

Google Ventures: A Strategic Investment in Nest Labs: In 2011, Google Ventures made its first investment in Nest Labs, leading a $50 million round. This investment was a significant milestone for both companies. Google Ventures recognized Nest's potential to disrupt the home automation market with innovative products. Following the investment, Nest Labs products were integrated into the Google ecosystem, including the Google Assistant and smart home platform. The partnership allowed Nest to leverage Google's resources and reach, further accelerating its growth and market dominance. Google, the parent company of Google Ventures, acquired Nest Labs in 2014 for a staggering $3.2 billion, making it one of the largest acquisitions in corporate venture capital history.

Toyota Ventures and Joby Aviation : Joby Aviation is an aviation company developing electric vertical takeoff and landing (eVTOL) aircraft focused on air taxi services. Following Toyota Ventures' initial investment in 2017, Toyota Motor Corporation invested another $44 million in Joby Aviation in 2018. Twelve months later, it became a strategic partner of the startup with an additional $350 million investment. The strategic partnership with Toyota provided the startup with much more than just financial support. The startup's team worked directly with teams of Toyota engineers to plan aircraft production, design components, and improve efficiency. By collaborating on numerous joint projects, the Toyota and Joby Aviation teams have fostered a collaborative culture and technology. Their goal is to soon be producing at scale in the sustainable urban air transportation market.

CVC Management and Strategic Choices

While 69% of CVC funds are funded from the parent company's balance sheet, 19% are considering moving to off-balance sheet financing. This trend, emerging as funds mature, suggests that CVCs are gaining greater independence and becoming more strategic in managing their relationships with their corporate parents. The percentage of funds below a certain investment threshold that can bypass investment committee (IC) review decreased from 38% in 2021 to 19% in 2024. Corporate control mechanisms for companies investing off-balance sheet are tightening.

In the CVC ecosystem, 62% of teams have fewer than 10 people. Team sizes increase as investment activity increases—funds that make 30+ investments annually have an average team size of 40. Carry or performance-based bonuses are more common among financially focused CVCs, a factor that increases investor motivation and encourages long-term thinking.

The exit rate for CVC investments has declined. The average CVC exited only 3% of its portfolio in 2024, compared to 8% in 2021. Approximately one-fifth of exiting companies are selling below their last private valuation. In light of these challenges, 52% of CVCs are considering secondary markets, and 15% are already leveraging them.

Many CVCs focus on creating strategic value, gathering market intelligence, and remaining aligned with the parent company's innovation agenda.

Implications for Domestic Corporate Venture Capital

As of February 2025, there were 91 CVCs in Turkey. According to the EY report, investments are particularly concentrated in fintech, SaaS, and artificial intelligence. ( Corporate Venture Capital Strategic Management Report ) In 2023, the participation rate of CVCs in investments in Turkey had risen to 38%. Following this, strategic investments have been trending upwards compared to financial investments in recent years.

The path followed by experienced CVCs in the global market can be a guide for new funds in emerging markets. 

1. Educating corporate sponsors
2. Increasing independence
3. Becoming more sophisticated by developing processes, methodologies, and partnerships

The CVC ecosystem remains resilient despite challenges. 

PoC collaborations are the most frequently chosen method by companies looking to make strategic investments.

Autonomous PoC management and outcomes provide a pipeline of opportunities to support corporate venture capital.