Is It Time For Entrepreneurs To Put Corporate VCs Back On The List – Part 1

Where Are Venture Capital Positioned In The Blockchain?

In the blockchain ecosystem, the start-up media comes awash with stories of the corporate venture capital prioritising their interests over those of the portfolio acknowledging that some of the stories which may have a basis in truth are critical to recognise there is much more to add to the story. While as for now it is high time the whole story is told.

The truth comes to the forefront that not all corporate venture capital firms are the same as they have a strategic advantage where they have access to proprietary insights from dozens of markets and technologies which are simply unavailable to other venture capital firms. Moving on the corporate venture capitals can, therefore, create synergies between the portfolio companies as well as parent companies helping accelerate business which comes with an opportunity unavailable to most of the venture capital firms. 

When It Comes To Choosing Between Strategically Focused As Well As Financially Focused Corporate Venture Capital

In the corporate venture capital, two types are essential to understanding the difference between them. The first type is therefore strategically focused on corporate venture capital providing significant benefits to the parties all over if done well. Accelerating portfolio companies, the firms come with revenue, Market/customer insights as well as technology/roadmap development.

Thereafter the second type is observed to be financially focused corporate venture capital as the firms run like the typical venture firms primarily driven to maximise financial returns with the firm’s partners rewarded for making profitable investments as the firms make investment decision similar to every other non-corporate venture firm based on team, market, competition, product, traction, capital efficiency, exit potential, etc.

In case an investment is made, the financially focused corporate venture capital firms often take board seats working to add value in all the same ways whereas other venture firms do along with strategy, product, go-to-market, hiring, financials, etc. they are just motivated as any other venture firm as the financially focused corporate venture partners are financially aligned with their portfolio companies. 

The Fact Is That Not All Corporate Venture Capital Firms Are The Same

What is then the upshot as it is observed that in many cases, the financially focused corporate venture capital firm is a better partner for some companies. Whereas not only is the firm providing the typical value-add of the typical venture firm, the smart partners, large networks, etc still provide something which other firms can’t provide which is proprietary insights. 

With a close working relationship with their corporate parent, the financially focused corporate venture firms with blockchain allow them access to technology, industry operators, and visionaries giving them proprietary insights to which the normal venture firms simply don’t have access. Giving financially focused corporate venture capital partners, the ability to see the market and technology landscape in a different more informed way are these proprietary insights. 

In this case, the bottom-line comes to be financially focused corporate venture capital firms with all the benefits of the typical venture firm along with exclusive proprietary insights without the potential downside of strategically driven corporate venture capital firms. 

The Truth About Why The Corporate Venture Capital Is A Competition For The Parent Company

It is one obvious objection to corporate the venture capital comes to be that these firms are unlikely to invest in the companies competing with the parent or in case they may put it out of business. Whereas these cases come to be rare which is barely worth mentioning as they are explored. With large companies like Comcast and NBCUniversal doing the business across the wide variety of sectors, the most unlikely is that anyone start-up is set to put them out of business.

What then is the case of start-ups which are competitive with Comcast or NBCUniversal where thousands of start-ups over the years are seen to have only come across the handful of them competitive with Comcast or NBCUniversal. Even though in those cases they have ever communicated confidential information passing it quickly so as not to give the even smallest impression of impropriety making the competitive start-up see a benefit of making the investment and learning from the partnering of each other done transparently. 

Finally, The Discussion Is To Be Continued In The Next Post

Hereafter it is accounted that in terms of blockchain, most of the venture capital firms have restricted themselves from investing in the companies which are competitive with their portfolio whereas some venture capital firms are taking a more survival of the fittest approach encouraging to make many investments in a hot space without the concern for competition.