Digital Business 2: Corporate & Digital Entrepreneurship

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Questions and Answers

What advantage does Corporate Venture Capital provide to start-ups regarding market access?

  • It provides automatic funding for marketing efforts.
  • It guarantees exclusive rights to market new products.
  • It eliminates competition in the market for the start-up.
  • It allows the start-up to utilize the corporate's sales channels or receive the corporate as a customer. (correct)

Which of the following is a financial goal of established companies in Corporate Venture Capital?

  • Achieving a high return on investment (ROI). (correct)
  • Enhancing the company's brand image globally.
  • Reducing operational costs through economies of scale.
  • Maximizing employee satisfaction.

How does Corporate Venture Capital assist start-ups in overcoming the 'Liability of Newness'?

  • By providing exclusive technology rights.
  • By ensuring immediate profitability.
  • By enhancing image and signaling professionalism. (correct)
  • By facilitating connections with potential investors.

What resource does Corporate Venture Capital provide that allows start-ups to focus on value creation?

<p>Relief from daily business administrative tasks. (B)</p> Signup and view all the answers

What is one of the social and image-effective goals of established companies participating in Corporate Venture Capital?

<p>To improve reputation and image for stakeholders. (C)</p> Signup and view all the answers

What is a primary focus in the structure of a Corporate Venture Capital program?

<p>Balancing financial and strategic goals (A)</p> Signup and view all the answers

What is a major barrier faced by Corporate Venture Capital initiatives?

<p>Lack of a clear mission and direction (B)</p> Signup and view all the answers

Which of the following is NOT a key success determinant for selecting start-ups in Corporate Venture Capital?

<p>Established brand recognition (D)</p> Signup and view all the answers

What aspect is important for ensuring the independence of a Corporate Venture Capital company?

<p>Maintaining structural independence (B)</p> Signup and view all the answers

What should characterize the development of the chosen start-up according to key success determinants?

<p>Coping with the loss of founders and managers (B)</p> Signup and view all the answers

Which goal is NOT typically associated with Corporate Venture Capital?

<p>Achieving operational efficiency (C)</p> Signup and view all the answers

What type of companies should Corporate Venture Capital focus on for selection?

<p>Start-ups with unique value propositions in growth markets (C)</p> Signup and view all the answers

What is a key characteristic that aligns the culture of a start-up and corporate for later integration?

<p>Similar corporate culture (A)</p> Signup and view all the answers

What is the primary purpose of accelerators in corporate venturing?

<p>To provide short-term support and curriculum to accelerate startup development. (C)</p> Signup and view all the answers

How do corporate hackathons differ from incubators?

<p>Hackathons are focused on a specific challenge, while incubators provide broader support. (D)</p> Signup and view all the answers

What are the distinguishing features of corporate incubation?

<p>Providing a path to market for non-core innovations with some support services. (D)</p> Signup and view all the answers

What aspect of corporate venturing allows for engagement with more startups?

<p>The standardized approach allows for broader engagement without deep involvement. (C)</p> Signup and view all the answers

What is a key feature of mergers and acquisitions in corporate venturing?

<p>They allow for quick purchases of complementary technologies. (B)</p> Signup and view all the answers

What is the main goal of corporate hackathons?

<p>To solve a corporate innovation challenge within a restricted timeframe. (C)</p> Signup and view all the answers

What is a common misconception about corporate incubators?

<p>They involve only financial investments with minimal support. (D)</p> Signup and view all the answers

In what way does corporate venturing separate itself from traditional investments?

<p>It allows participation in the success of external innovations with insights into new markets. (D)</p> Signup and view all the answers

What are corporate accelerators designed to do?

<p>Support cohorts of start-ups during the new venture process (B)</p> Signup and view all the answers

Which characteristic is NOT typical of corporate accelerators?

<p>Support of single founders (D)</p> Signup and view all the answers

What is one strategic goal of corporate accelerators?

<p>To gain and retain entrepreneurial talents (B)</p> Signup and view all the answers

How does a corporate become a customer in the context of start-ups?

<p>By selecting solutions and testing product-market fit (B)</p> Signup and view all the answers

Which of the following is a central advantage of corporate accelerators?

<p>They enable faster market entry for start-ups (A)</p> Signup and view all the answers

What characterizes the 'Listening' type of corporate accelerator?

<p>Strategic exploration with no external partners (D)</p> Signup and view all the answers

What is emphasized as a critical success factor for corporate accelerators?

<p>Clear alignment of activities to a superior goal (C)</p> Signup and view all the answers

Corporate venture capital (CVC) differs from traditional VC in that it has:

<p>both financial and strategic motives (A)</p> Signup and view all the answers

What is a potential role of a corporate in the 'distribution partner' relationship?

<p>To provide distribution channels for start-ups (B)</p> Signup and view all the answers

Which phase of participation is typical for the 'Unicorn Hunter' type of corporate accelerator?

<p>Early and Later Stage (A)</p> Signup and view all the answers

How is corporate venture capital defined in relation to established companies?

<p>As temporary equity participation with management support (A)</p> Signup and view all the answers

What signifies the purpose of corporate accelerators when they 'buy' a start-up?

<p>To solve specific problems and develop new markets (C)</p> Signup and view all the answers

Which statement about the characteristics of corporate accelerators is true?

<p>They aim for temporary support to foster innovation. (A)</p> Signup and view all the answers

What is a primary goal of start-ups in cooperation with established companies?

<p>To profit from the established company's reputation (A)</p> Signup and view all the answers

Which factor is mentioned as a determinant for successful cooperation?

<p>Discussing at eye level between partners (B)</p> Signup and view all the answers

What is a common misconception about start-ups when partnering with established companies?

<p>They have a stable financial situation (A)</p> Signup and view all the answers

What describes the relationship between start-ups and corporates in terms of risk and potential return?

<p>Low risk for corporates with potentially high return (D)</p> Signup and view all the answers

What distinguishes the strategic goals of corporates compared to start-ups in their cooperation?

<p>Corporates may treat it as a preventative strategy (C)</p> Signup and view all the answers

Which action is NOT advisable for ensuring successful cooperation?

<p>Encouraging the escalation of power dynamics (C)</p> Signup and view all the answers

What is one of the main benefits corporates seek from starting up cooperations?

<p>Utilizing the start-up's agility and innovativeness (A)</p> Signup and view all the answers

What is a typical expectation of established companies from their start-up partners?

<p>Technical competence proof (D)</p> Signup and view all the answers

In terms of corporate venturing, what is a common format used to assist start-ups?

<p>Incubators that offer protected space (B)</p> Signup and view all the answers

How do corporates typically want to control technology in their agreements with start-ups?

<p>They strive to maintain joint control with start-ups (A)</p> Signup and view all the answers

What role does empathy play in the cooperation between start-ups and corporates?

<p>It helps in understanding each other's challenges (D)</p> Signup and view all the answers

Why might a start-up find it challenging to have an established corporate partner?

<p>They may lack experience with large companies (A)</p> Signup and view all the answers

What is typically a secondary goal for start-ups when entering into cooperation?

<p>Combining corporate resources and market advantages (A)</p> Signup and view all the answers

What aspect can signify a fundamental difference in cooperation goals between start-ups and corporates?

<p>Start-ups view cooperation as a survival strategy (C)</p> Signup and view all the answers

Flashcards

Why do VCs exist?

Venture capitalists (VCs) are specialized investors with superior expertise in understanding investment opportunities compared to typical fund investors.

How does CVC help startups?

Corporate venture capital (CVC) helps startups overcome challenges related to their newness and small size, demonstrating credibility and professionalism.

What market access benefits does CVC offer?

CVC can provide startups with access to established sales channels, potentially becoming a direct customer of the startup.

How can CVC benefit startups in terms of knowledge?

Corporations often possess deep industry knowledge, which startups can leverage to quickly gain insights into customer needs and industry trends.

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What are the financial goals of CVC?

CVC aims to generate high returns on investments (ROI) by diversifying risk across a balanced portfolio.

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Corporate Hackathons

Corporate hackathons involve teams collaborating intensely for a limited time to solve a specific innovation challenge set by a company.

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Business Incubators

Business incubators offer startups a dedicated, company-supported workspace with additional value-added services like legal and marketing support.

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Corporate Incubation

Corporate incubation provides a path to market for innovations that are not part of a company's core business.

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Corporate Venturing

Corporate venturing allows corporations to participate in the success of external innovations, gaining insights into new markets and capabilities.

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Corporate Accelerators

Corporate accelerators provide structured support (programs, mentorship, funding) to startups for a limited time (3-6 months), accelerating their development.

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Mergers & Acquisitions

Mergers and Acquisitions involve a company acquiring another company or technology to quickly access new capabilities or enter new markets.

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Corporate Venturing Differentiators

They are focused on innovation, business development, and gaining insights into new markets. They often engage with a larger number of startups using a standardized approach.

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Corporate Incubators & Accelerators Differentiators

They are characterized by substantial and long-term engagement with participants, competitive startup selection, and cyclical cohorts with shorter timeframes. They may or may not involve an equity stake.

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CVC Mission

A corporate venture capital (CVC) program should have a clear mission and direction, focusing primarily on strategic goals.

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CVC Investment Managers

Finding experienced investment managers with a background in entrepreneurship or investing is crucial for a successful CVC program.

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CVC Independence

CVC companies should be structurally independent to ensure their investment decisions are not influenced by corporate biases.

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CVC Target Companies

CVC programs should target young companies with a unique value proposition, operating in large and rapidly growing markets.

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CVC Team Evaluation

Start-up teams should possess experience, competence, and the potential for success, indicating their ability to lead a company.

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CVC Business Model

CVC investments should prioritize start-ups with proven business models that don't require significant adaptation for corporate integration.

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CVC Culture Match

The corporate culture of the start-up should be compatible with the corporation's culture to facilitate future integration.

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CVC Management Experience

Start-up managers with prior experience in management or corporations are preferred as they understand the challenges of scaling and integrating a business.

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Incubator

Corporations create a protected space for start-ups, providing support for a short period (6-12 months).

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Company Builder

Corporations strategically allocate internal/external entrepreneurial talent to specifically chosen start-up projects.

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Start-up Corporate Cooperation

Start-ups expand the partnership opportunities for established companies, especially for innovative projects.

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Start-up Corporate Cooperation: Objectives

The main objective is to create mutual advantages by bringing in complementary resources. Start-ups contribute agility and innovation, while corporations supply resources and market access.

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Start-up Corporate Cooperation: Discrepancies

Discrepancies exist in expectations between start-ups and established companies. Start-ups often lack experience, references, and stability, while corporations expect strong capabilities and proven track records.

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Start-up Corporate Cooperation: Differences

Start-ups prioritize control over technology and survival, whereas established companies focus on gaining control and strategic prevention.

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Start-up Corporate Cooperation: Expectations

Start-ups seek access to customers, resources, and expertise, while corporations aim for innovation and strategic growth through partnerships.

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Corporate Venturing: Strategy

Corporate venturing involves developing a comprehensive company-wide plan for collaborating with start-ups.

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Corporate Venturing: Understanding Trends

Corporations must understand the current trends and needs of the start-up ecosystem through proper screening and analysis.

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Corporate Venturing: Defining Values

Corporations need to define the values they are willing to share with startups and design partnerships accordingly.

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Corporate Venturing: Defining Goals

Corporations clearly define their primary and secondary objectives for engaging in start-up collaborations.

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Corporate Venturing: Outside-In Strategy

‘Outside-In’ approach: Corporations revitalize their core business through start-up innovation.

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Corporate Venturing: Inside-Out Strategy

‘Inside-Out’ approach: Corporations commercialize technologies developed by start-ups that don't fit their core business.

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Start-up Corporate Cooperation: Success Factors

Success in start-up corporate cooperation relies on establishing clear goals, understanding each other's perspectives, negotiating fair contracts, and avoiding power imbalances.

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What are corporate accelerators?

Corporate accelerators are programs designed to support start-ups during their early stages. These programs typically involve mentorship, education, and access to company-specific resources.

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Define a corporate accelerator.

A corporate accelerator is a program that helps start-ups develop and grow by providing them with resources like mentorship, education, and access to networks.

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What are the key characteristics of corporate accelerators?

Corporate accelerators typically have an open application process, meaning anyone can apply to join the program. They also focus on small teams of founders rather than just individuals.

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What is one of the main strategic goals behind corporate accelerators?

Corporations use accelerators to gain knowledge about emerging trends and technologies in the market. They also use them to scout for potential disruptive products or services.

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How can corporations use accelerators to identify potential disruptions?

Corporations might leverage accelerators to evaluate new technologies or products that could disrupt their current business model.

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What is a primary human resource benefit of corporate accelerators?

Corporations utilize accelerators to identify and recruit potential employees. They can tap into the talent pool of start-ups and bring in individuals with entrepreneurial skills.

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How do corporate accelerators help corporations foster internal innovation?

Corporate accelerators can help corporations transfer the entrepreneurial spirit of start-ups back into their organization. This fosters a more innovative and dynamic culture.

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How do start-ups benefit from participation in a corporate accelerator program?

By participating in corporate accelerators, start-ups can gain access to resources like funding, mentorship, and networks that they might not otherwise have.

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How do corporate accelerators support start-up pilot projects?

Corporations can provide funding for pilot projects of start-ups, enabling them to test new solutions and products with reduced risk and faster development.

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How can corporations act as customers of start-ups?

Corporations can become customers of the start-ups they support, providing valuable feedback and validation for the company.

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How can corporations help start-ups with market access?

Corporations can offer their distribution channels to start-ups, reaching a broader market and helping them scale their operations.

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How can corporations invest in start-ups through CVC?

Corporations can invest directly in start-ups through their corporate venture capital arms, providing them with funding and strategic guidance.

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How can corporations acquire start-ups?

Corporations can acquire promising start-ups directly, leveraging their technology, talent, or market access to achieve their goals.

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Define Corporate Venture Capital (CVC).

Corporate venture capital (CVC) is a type of investment where corporations invest in young, technology-focused businesses, often with both financial and strategic goals.

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Why is CVC different from traditional venture capital?

CVC investments are driven not just by financial returns but also by strategic goals. Corporations often invest in start-ups that can provide them with new technologies, market access, or talent.

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Who are the typical targets for CVC investments?

Corporations use CVC to invest in unlisted smaller businesses (SMEs) that are technologically oriented, often involving a mix of financial investment and management expertise.

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Study Notes

Digital Business 2: Corporate & Digital Entrepreneurship

  • Course code: 601.922
  • Instructor: Dr. Patrick Holzmann

Corporate & Digital Entrepreneurship: Cooperation

  • Focuses on cooperation between corporations and startups.
  • Highlights the increasing importance of this type of cooperation due to factors such as limited funding for startups and potential high returns for corporations.

Corporate Entrepreneurship and Cooperation

  • Central connections between incubators, company builders, accelerators, and startups.
  • Enable cooperations with startups.
  • Investment in startups can lead to innovative ideas and flexibility.
  • Corporations can benefit through venture capital financing.
  • Implementation of corporate entrepreneurship is facilitated by cooperation.

Start-up Corporate Cooperation

  • Introduction and basics
  • Startups expand cooperation with various partners (customers, suppliers, universities).
  • New forms of cooperation are emerging and expanding classic investments.
  • Cooperative ventures aim to leverage complementary resources (e.g., startup agility versus corporate resources/market power).
  • Cooperations are becoming more frequent due to low funding and low innovation risk.
  • Empiricism suggests a promising framework for cooperation.

Discrepancy between Start-ups and Corporates

  • Expectations of established companies for cooperation partners include proof of technical competence, existing reference customers, and familiarity with business processes.
  • Startups may present ideas and prototypes but lack established marketable products, few customers, and industry experience.

Fundamental Differences in Cooperation Goals

  • Startups strive to maintain control over technology, are confident in their technology, and prioritize decision-makers as executors.
  • Established companies seek to take control, are more skeptical, and prefer decision-making by non-executors.

Start-up Corporate Cooperation: Expectations and Objectives

  • Startups aim to leverage customer/market access and reputation of the partnering corporation.
  • Combining technology expertise with the corporation's knowledge is another goal.
  • Potential for enabling future investment by the corporation and selling the startup to the corporation are important objectives.
  • Startups also look for access to data

Start-up Corporate Cooperation: Matching of Objectives and Suitable Actions

  • Matching of objectives and suitable actions is a crucial aspect.
  • Generating know-how and utilizing references from startups.
  • Acquiring potential customers through pilot customers.
  • Utilizing startup resources effectively.
  • Finding technology partners.
  • Startups need to ensure growth, supervisory board mandate, investment, and joint ventures.

Start-up Corporate Cooperation: Determinants of Successful Cooperation

  • Development of a company-wide plan for collaboration.
  • Establishing alignment of objectives between partners.
  • Applying empathy and understanding.
  • Discussing at eye level and preparation of transparent contracts.
  • Renouncing abuse of power and start-ups bearing innovation losses.
  • Corporations following prevention strategies.
  • Preventing enticing away of employees, and taking over of ideas of partners.

Start-up Corporate Cooperation: Central Aspects of Strategy Development

  • Understanding current trends and developments; Screening the startup ecosystem for insight into needs.
  • Clarifying values and capabilities available to share.
  • Clarifying and defining primary and secondary cooperation goals.
  • Outside-in strategy: Revitalization through startup creativity & innovation.
  • Inside-out strategy: Commercialization of innovative technologies that don't fit the core business.

Corporate Venturing

  • Established companies increasingly use structured programs for cooperation with spin-offs and startups.
  • The overall goal is to improve the probability of success of startups by leverage the corporation's resources.
  • Facilitating the strategic and financial goals for the corporation.
  • Different forms of cooperation, including incubators, company builders, and accelerators.

Corporate Venturing: Spectrum of Possible Involvement

  • Corporate Hackathons: Intense collaborations.
  • Business Incubators: Company-supported flexible space.
  • Corporate Incubation: Provides a path to market for non-core developments.
  • Corporate Venturing: Corporations participate in external innovation.
  • Mergers & Acquisitions: Quick access to capabilities.

Corporate Accelerators: Definition & Characteristics

  • Defining corporate accelerators as temporary programs that support startups in the new venture process (mentoring, education).
  • Common characteristics include open application process, focus on smaller teams, temporary support, and support of startup cohorts.

Corporate Accelerators: Strategic Goals of Corporates

  • Building knowledge about market trends and technologies.
  • Developing and integrating new products and services.
  • Evaluating disruptive products and services.
  • Acquiring and retaining entrepreneurial talent.
  • Transferring entrepreneurial spirit into the company.

Corporate Accelerators: Different Characteristics and Central Advantages

  • Corporate support for startup pilot projects reduces costs and accelerates processes.
  • Corporations become customers and know solutions and scaling.
  • Corporations become distribution partners for pooling resources.
  • Corporations investing in startups (CVC) allows them to enter markets quickly/efficiently.
  • Corporations can buy startups (attractive exit scenario).

Corporate Accelerators: Typology of Different Programs

  • Different typologies based on goals, listening post methodologies, value chain strategies/investors, and focus on strategic logic and opportunity.

Corporate Accelerators: Critical Success Factors

  • Clear alignment of activities with a superior goal and top management support.
  • Long-term nature of corporate efforts focused on value creation of the startup.
  • Providing access to corporate resources, increasing credibility/legitimacy, and facilitating market access.

Corporate Venture Capital (CVC)

  • CVC is inspired by independent Venture Capital companies, but pursues strategic goals in addition to financial ones.
  • CVC defines temporary equity participation and management know-how support for young, technologically-oriented companies.
  • CVC is based on financial intermediation theory.

Corporate Venture Capital: Advantages for Startups

  • CVC helps overcome "Liability of Newness" and "Liability of Smallness."
  • Startups benefit from market access through corporate channels.
  • Startups access corporate networks and knowledge from the industry.
  • Reduces administrative burden on startups.

Corporate Venture Capital: Goals of Established Companies

  • Financial goals (high ROI, risk spreading).
  • Building a positive social & image-driven external image.
  • Supporting the regional technology and startup ecosystem.
  • Strategic goals include observation of emerging technologies, promoting their own company's growth and market reach, and strengthening internal entrepreneurial spirit.

Corporate Venture Capital: Major Barriers

  • Lack of clear mission/direction for the venture capital program.
  • Finding qualified/sufficient investment managers.
  • Determining appropriate compensation of investment managers/advisors.

Corporate Venture Capital: Central Determinants of Success

  • Structuring the program with balanced financial and strategic goals.
  • Engaging investment managers with pertinent experience as entrepreneurs and/or investors.
  • Ensuring structural independence to the CVC company.

Corporate Venture Capital: Key Success Determinants

  • Selecting startups that meet certain standards of uniqueness, large-potential market fit, and proven/scalable business models.
  • Proven startup models.
  • Strong start-up teams with management / entrepreneurial experience.
  • A strong alignment between startup and corporation culture.

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