Corporate Venture Building
Script error: No such module "Draft topics". Script error: No such module "AfC topic".
Corporate Venture Building (CVB) is a strategic business practice in which established companies create and grow new startups (ventures) to drive innovation, explore new markets, generate new revenue streams, and enhance their competitive position.
Unlike traditional Venture Capital (VC), where external investors fund independent startups, which is mostly driven by expected financial returns, Corporate Venture Capital (CVC) and CVB focus in addition on realizing strategic goals, e.g., developing new technologies and business models or accessing new markets.
CVB typically involves a structured process where a corporation identifies opportunities for growth and innovation within or adjacent to its core business. Instead of merely investing in external startups, which is the focus of CVC and VC practices, the corporation engaging in CVB takes an active role in the ideation, development, and scaling of new startups (ventures). This collaborative approach allows the corporation to leverage its resources, industry expertise, and market presence to accelerate the growth of these startups. Among others, advantages of CVB include the holistic engagement, the usually higher degree of control, and, therefore, the ability to steer strategic direction and increase chances of success.
One of the key rationales of CVB is to leverage (exploit) an existing and typically well-established company's assets while simultaneously building (exploring) new capabilities to create a significant new business (model) besides the existing core business in order to drive innovation and growth in a strategically relevant area.[1] The new business unit is usually detached from the mother company, for the business not to be constrained by corporate hierarchies, processes etc. but be positioned with flexibility, agility and speed like a startup.[2][3] To reduce the risk of failure that is associated with exploring a new business (model), usually not only a single new idea but a whole portfolio of ideas is explored through a structured process. Corporate venture builders, sometimes also referred to as venture studios or startup studios, help companies to identify and validate new ideas within a short frame of time, and if promising, help in building and launching the new business.
The CVB process typically involves several stages: ideation, development, and scaling. Corporations engaging in CVB actively participate in these stages, leveraging their resources, industry expertise, and market presence to accelerate the growth of new ventures. This structured approach ensures that new ventures are aligned with the corporation's strategic goals and benefit from the corporation's existing capabilities. [2][4] The operational structure of CVB often involves detaching new business units from the parent company to provide flexibility, agility, and speed. This detachment allows new ventures to operate like startups, free from the constraints of corporate hierarchies and processes.[2][3] Typically, a portfolio of ideas is explored through a structured process to mitigate the risk associated with new business models.
Advantages and Challenges
CVB offers several advantages over traditional VC and CVC, including holistic engagement, higher degree of control, strategic direction, and increased chances of success. By leveraging existing resources and expertise, corporations can reduce the risk of failure and integrate new ventures more seamlessly into their operations.[1]
Despite its advantages, CVB also presents challenges, such as managing the balance between the parent company and new ventures, ensuring adequate funding, and maintaining the agility of new ventures. Strategies to overcome these challenges include clear governance structures, dedicated funding mechanisms, and fostering a culture of innovation.[5]
References[edit]
- ↑ 1.0 1.1 Hill, Susan A.; Birkinshaw, Julian (August 2, 2006). "Ambidexterity in Corporate Venturing: Simultaneously Using Existing and Building New Capabilities". Academy of Management Proceedings. 2006 (1): C1–C6. doi:10.5465/ambpp.2006.22898139 – via CrossRef.
- ↑ 2.0 2.1 2.2 https://www.insead.edu/sites/default/files/assets/dept/centres/gpei/docs/gpei-corporate-innovation-through-venture-building.pdf
- ↑ 3.0 3.1 Genberg, Paul. "Council Post: Corporate Venture Building: The Fastest Path To Innovation". Forbes.
- ↑ Rampazzo, A. "Corporate Venture Building: The Fastest Path to Innovation". Forbes.
- ↑ Dushnitsky, Gary; Lenox, Michael J. (November 2006). "When does corporate venture capital investment create firm value?". Journal of Business Venturing. 21 (6): 753–772. doi:10.1016/j.jbusvent.2005.04.012 – via ScienceDirect.
This article "Corporate Venture Building" is from Wikipedia. The list of its authors can be seen in its historical and/or the page Edithistory:Corporate Venture Building. Articles copied from Draft Namespace on Wikipedia could be seen on the Draft Namespace of Wikipedia and not main one.
