Steps to Launching CVC: 4 Key Points

Launching a Corporate Venture Capital (CVC) initiative is a strategically important endeavor for companies. Below are the details and best practices for each step in the launch process.

At FIRST CVC, we provide support for establishing and launching CVCs. If you are considering setting up a CVC, feel free to contact us.

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1. Industry Research: Understand the latest technological trends and startup landscape to identify investment opportunities.
2. Clarifying Investment Objectives: Set clear goals from both a strategic and financial perspective, and establish a consistent investment strategy.
3. Scheme Consideration: Choose the appropriate investment scheme, such as direct investment or LP investments, and create an execution plan.
4. Organizational and HR System Consideration: Build an organizational structure that enables effective decision-making processes and business collaboration.

1. Industry Research

Industry research is a critical first step in launching a CVC. This includes the following activities:

• Research on Target Industries
• Interviews with Startups
• Case Studies of CVCs in the Same Industry

Why It’s Important

Industry research is essential for understanding the technological trends and promising startups in relevant industries. This provides the following benefits:

1. Identifying Investment Opportunities: Understanding the latest technology trends and innovations makes it easier to spot promising investment targets.
2. Risk Reduction: Keeping up with industry trends helps mitigate investment risks.
3. Networking: Building connections through interviews with startups and researching other CVCs helps expand your network.
4. Differentiation: By understanding competitors’ movements, you can establish a unique position for your CVC.

2. Clarifying Investment Objectives

Clarifying investment objectives is essential for determining the direction of the CVC. While many CVCs are believed to focus on strategic returns, our research shows that many CVCs invest even without clear business synergies (77% of investments possible without synergies). In this step, the following should be done:

• Set medium- and long-term goals from both a strategic and financial perspective
• Incorporate quantitative and qualitative goals for each year into the investment plan

Why It’s Important

Having clear investment objectives is important for the following reasons:

1. Ensuring Consistency: Maintaining a consistent investment strategy throughout the organization.
2. Streamlining Decision-Making: With clear goals, investment decisions become smoother.
3. Performance Measurement: It becomes easier to assess the CVC’s performance against the set goals.
4. Optimizing Resources: Resources can be appropriately allocated in alignment with objectives.

3. Scheme Consideration

Considering the investment scheme is a crucial step in the execution phase of a CVC. Here, the following actions are taken. We also explain the merits and demerits of various investment schemes on the page below, which can be referenced:

Learn more about representative investment schemes

• Consider the policies and budgets for each scheme, such as direct investments and partnerships
• Create a journey map for business launches, taking into account the skills of the team members

Why It’s Important

Choosing the right scheme is important for the following reasons:

1. Risk Management: By understanding the risks and returns of each scheme, you can manage them appropriately.
2. Skill Matching: Selecting schemes based on the skills of the team members enables effective management.
3. Gradual Growth: Creating a journey map allows for a structured growth plan for the CVC.

4. Organizational and HR System Consideration

Finally, considering the organizational and HR systems is crucial for the long-term success of a CVC. It’s important to build a system that can make investment decisions based on leadership commitments.

• Design the decision-making process for investments
• Design systems for effective business collaboration

Why It’s Important

Building the right organizational and HR systems is important for the following reasons:

1. Quick Decision-Making: With a clear decision-making process, investment opportunities can be seized quickly.
2. Avoiding Conflicts of Interest: Proper system design helps prevent conflicts of interest with the parent company.
3. Talent Acquisition and Development: Provides a foundation for acquiring and developing talent suited for the CVC.
4. Maximizing Synergy: Promotes collaboration with business units and maximizes synergies with investment targets.

Our research also shows that CVCs with high leadership commitment and good communication have a higher percentage of leading CVCs.

5. Conclusion

Launching a CVC is a complex process, but by focusing on these four steps, companies can create a strong foundation for building a sustainable and successful CVC. By carefully executing each step and seeking expert advice when necessary, companies can expect enhanced corporate value and strengthened competitiveness through their CVC.