5 :: CVC vs. CVB

🚪TL;DR:

We know innovation can happen anywhere. Corporate innovation, more concretely, can happen in (aka impact) virtually any business area - from strategy to marketing, finance to operations, or even human resources. The question tends to be more about whether to make, buy, or ally for it, and, depending on who’s asking, CVC or CVB seem to be the top two answers. Investing in new ventures or building your own are just different routes to get to the same destination. One just needs to properly plan for possible roadblocks and pitstops on the way there.

🧠 What is it?
Corporate venturing can take various forms and these are two of the most sought-after. Corporate Venture Capital (CVC) is one in which a large established company invests in other business ventures (typically startups) to generate financial returns but also to get access to cutting-edge technologies, potential partnerships, or acquisitions - global record spikes have been achieved lately in CVC funding with $169.3B in 2021 alone. Corporate Venture Building (CVB) is another one but one in which the large established company creates and grows new ventures from scratch with its own resources and expertise, in something like a startup studio, usually to build strategic capabilities and/or capture new market opportunities.

📦 Why is it relevant?
It is natural that innovation always works very closely with the rest of the C-suite, as its role can impact all others and every area of the business. As such, it is the role of the CINO to collect their needs (jobs-to-be-done, problems to be solved) and select the best strategy (i.e. CVC or CVB or others) to address them - also based on the available resources, the existing initiatives, or even the innovation maturity level of the company (current and desired). Google Ventures or Intel Capital are successful examples of CVCs and P&G Ventures, Studio X (from Shell), or Mission 42 (from Credendo) of CVBs. There are also examples of external companies, like Beta-i, Bundl, or BCG X, that provide it as a service. But only by fully understanding the differences, pros, and cons, the right decision can be made.

🧶 Where to learn more about it:
Both strategies have been quite popularized during the last few years, so a lot has been said and written about it. For a general overview of corporate venturing, though, I still really like this BCG article. Then, here are some really good perspectives about CVC:
:: Making Sense of Corporate Venture Capital (Harvard Business Review)
:: Why the Golden Age of Corporate Venture Capital is yet to come – despite COVID-19 (PwC)
:: The Three Benefits Of Corporate Venture Capital (And How To Choose The Right Firm) (Forbes)

And here about CVB:
:: Why business building is the new priority for growth (McKinsey)
:: These practical and easy-to-use resources will help take your corporate venture to the next level and beyond (Bundl)
:: Corporate Venture Building: The Fastest Path To Innovation (Forbes)

See you next Tuesday! 👋