The Reason for Starting a Corporate Venture Capital (CVC)

Why Companies Start CVC and Its Background

In recent years, many companies have started Corporate Venture Capital (CVC) activities, driven by various strategic intentions. According to the latest research, the primary reason companies initiate CVC is to "strategically strengthen existing businesses and promote the development of new ventures." 75% of companies cite this reason, indicating a strong expectation for innovation creation.

The next most common reason is "feeling limitations in in-house business development," with nearly half of the companies citing this challenge. This reflects a recognition that traditional in-house R&D cannot keep up with rapid technological advancements and market changes, prompting a shift toward CVC. Interestingly, around 20% of companies cited "the potential of CVC activities leading to M&A," signaling that some companies view CVC as part of their M&A strategy, investing with future acquisitions or partnerships in mind.

About 18% of companies see the investment itself as a new business, positioning CVC activities as a standalone venture. Another 13% mentioned that CVC activities started as a result of collaboration with startups, showing that in some cases, CVC emerges naturally through partnerships. Notably, only about 10% cited "competitor actions" as a reason for starting CVC, highlighting that most companies begin CVC activities based on their own strategic needs, not merely as a response to competitors.

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Summary

The reasons for starting CVC are largely centered on strategic goals like strengthening existing businesses and developing new ventures. Many companies turn to CVC to overcome limitations in in-house development, while others incorporate it into their M&A strategy or treat it as a new business initiative. It’s important to note that the majority of companies start CVC based on their own strategic needs, rather than as a response to competitors.

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