Purpose of CVC Establishment: Balancing Strategic Value and Financial Returns

According to the "JAPAN CVC SURVEY 2023" conducted by FIRST CVC, the objectives behind the establishment of CVCs (Corporate Venture Capitals) in Japanese companies have significantly evolved.

Shift from Strategic Investment

Compared to general CVCs, leading CVCs are more focused on establishing startup investments as a distinct business venture. On the other hand, general CVCs tend to focus on strategic synergies with the core business, such as overcoming internal business development limitations or exploring new and existing business areas. This trend aligns with the fact that leading CVCs place more importance on financial returns, and many of them are hybrid CVCs or financial CVCs.

While hybrid CVCs have often been criticized for having unclear objectives, which makes it difficult to achieve results, this survey suggests that hybrid CVCs might actually have an advantage over strategic CVCs. In the short term, achieving strategic synergies can be challenging, and in order to receive continued support from the parent company, it might be necessary to maintain some level of financial discipline.

Summary

The purpose of CVC establishment has evolved from simple strategic investment to a more refined investment approach. Successful CVCs must balance financial returns and strategic value while maintaining a harmonious relationship with the core business. In the future, it is expected that more Japanese companies will establish their own CVC strategies, responding to these complex demands.

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