CVC Decision-Making Lead Time

In recent years, the activities of Corporate Venture Capital (CVC) have become more active, and the speed of investment decision-making has become a crucial source of competitive advantage. According to the results of the JAPAN CVC SURVEY 2023, it has become clear that there are significant differences in the decision-making lead times among different types of organizations in Japan's CVC sector.

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Current State of Decision-Making

According to the survey, about 70% of CVCs complete their investment decisions within 3 months. Notably, there are differences in decision-making speed between strategic CVCs and financial CVCs.

For Financial CVCs:
- About 80% make decisions within 3 months
- The most common decision-making period is 1-2 months
- Quick decision-making is characteristic

For Strategic CVCs:
- About 60% make decisions within 3 months
- A more cautious decision-making process
- Tends to require more time for internal coordination

The Background Behind the Focus on Speed

The focus on accelerating decision-making in CVCs is driven by the following factors:
- Shortened fundraising cycles for startups
- Competition for deals with other investors
- The need to meet the expectations of startups

Challenges and Directions for Improvement

Compared to general VCs, the following points are particularly challenging for CVCs:

1. Complexity of internal approval processes
2. Time spent on coordination with business units
3. Duration of due diligence process

In response to these challenges, advanced CVCs are implementing the following measures:
- Regular investment committee meetings
- Streamlining pre-consultation processes
- Establishing clear investment criteria
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Summary

Japanese CVCs are making steady progress in accelerating decision-making, with 70% of CVCs achieving decisions within 3 months. Notably, financial CVCs, due to their high level of independence and efficient processes, are able to make decisions in shorter periods of time.

On the other hand, strategic CVCs tend to take longer decision-making periods due to the need for business synergy and internal coordination. Going forward, further efficiency improvements through the use of digital technologies and optimization of decision-making processes are expected.

Balancing the speed of decision-making with appropriate risk management will be a critical factor in determining the competitiveness of CVCs.

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