![]() ![]() The disadvantages of corporate venturing and venture capital is it can put pressure on entrepreneurs to grow faster and dilutes the stake of the founding and/or management team, and with preference shares can have an earlier claim on assets in a break-up.Corporations can of course set up customer/supplier partnerships or lend money or have other claims on assets. By being equity, corporate venturing and venture capital has no demands on a startup’s cash but is rewarded if the business becomes more valuable in a sale and/or profitable to pay a dividend. Banks can be reluctant to lend against new ideas unless there is collateral (an asset) to put against the debt and charge interest each year. Entrepreneurs looking to grow their business often require money to invest in hiring people, finding customers and developing their products and services.Corporate venturing can do this but can often also involve looking for strategic benefits and a greater range of support to the entrepreneurs and investor. Venture capital refers to independent firms – called general partners – raising money from primarily institutional investors – called limited partners – to take minority equity stakes for purely financial returns.Leaders across the industry share their insights and expertise with their peers in ‘unpanel’ discussions during the 2021 GCV Symposium in London In turn, the corporation receives the ideas and support for their existing business units and strategic and/or financial benefits for their own growth strategy and cost savings. Corporate venturing involves larger companies investing in and supporting entrepreneurs, such as taking minority equity stakes, either directly or through venture capital funds, as well as other innovation tools, including incubators, accelerators and developing internal innovation – ‘intrapreneurship’.Įffectively, it’s about companies thinking about how they help entrepreneurs with their business needs of raising money, finding customers, developing their own products and services, hiring people and, eventually, an exit. ![]()
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