Research of the Day 💸
Corporate VCs have ramped up their investments over the years, not wanting to miss out on the booming startup market.
According to a new Bain & Company report, corporate venture capital (CVC) investments in startups across the globe have grown to more than a fifth of total venture capital value.
What does this mean?
Growing CVC activity indicates that more and more companies are betting on the potential digital winners of the future. This doesn't only make sense from a hedging perspective to prepare for the future. Through startup investments, companies get early access to companies they might want to buy later, and they learn more about the cutting edge of their industry, meaning CVC must be understood as a market-sensing mechanism.
As Bain explains:
Consider that the best venture capital firms engage in hundreds of discussions with start-ups each year. They are exposed to hundreds of business plans, and, as a result, they start to see emerging disruptive trends four or five years earlier than the general public. While a venture capital fund’s team may invest only in 2 out of 100 companies they meet with, a critical part of the value lies in the insights gleaned from the other 98.
Read the full report here.