Corporate Venture Capital
The Hidden Challenges of Corporate Venture Capital
(And How to Overcome Them)
Corporate Venture Capital (CVC) groups have grown in popularity as a vehicle to drive disruptive innovation and growth. Compared to traditional R&D efforts or large-scale M&A, CVCs can deliver impactful results faster, often with less financial risk. However, scaling a successful CVC operation comes with its own set of unique challenges, many of which persist despite years of refinement.
Corporate Venture Capital (CVC), in the context of innovation, refers to the practice of established corporations investing directly in external startup companies to achieve strategic objectives. Unlike traditional venture capital, which primarily focuses on financial returns, CVC aims to drive innovation by accessing new technologies, markets, and business models. This approach allows corporations to enhance their innovation capabilities, foster partnerships with agile startups, and gain competitive advantages in rapidly evolving markets. Through CVC, corporations can diversify their innovation efforts, mitigate risks, and stay agile in an uncertain business environment.
About 12 years ago, I had the opportunity to facilitate a fireside chat with two leaders tasked with launching CVC groups for their respective companies, both of which were major global oil corporations. One of the most memorable insights from that conversation was how frequently deals fell apart in year one– not because of poor investment choices, but due to internal misalignment between the newly formed CVC groups and the corporate functions that supported them (such as legal, procurement, and finance.)
The tension was clear: the CVC’s mandate was to move fast, take risks, and be disruptive, while the corporate functions were designed to reduce risk, ensure compliance, and slow things down for due diligence. This fundamental misalignment often led to delayed or lost deals.
The breakthrough came when one company created dedicated corporate function teams that were aligned with the CVC’s mission — allowing them to operate with agility while still maintaining corporate oversight. Deals started closing, and innovation began to flourish.
The Challenges of CVC
Fast forward to 2024, and the challenges CVC teams face have evolved but not disappeared. A recent Forbes article highlighted some of the most persistent roadblocks for CVCs, including:
- Conflicting priorities and misaligned goals between the CVC and parent company.
- Lack of strategic direction or a clear long-term innovation vision.
- Limited bandwidth within the CVC team to balance sourcing, evaluating, and closing deals.
The bandwidth issue in particular is one I hear about frequently from CVC leaders today. Most teams can dedicate their time to either scouting and sourcing opportunities or evaluating and closing deals but rarely both. As resources get pulled into the time-intensive process of due diligence and partnership negotiation, pipeline generation slows down, leaving future growth at risk.
Additionally, another familiar frustration is late-stage deal failure. After months of due diligence, partnership discussions, and investment evaluations, deals can still unravel in the final stages- often due to misalignment on vision, terms, or execution expectations.
How Ezassi Can Support CVC Teams
This is where Ezassi can significantly reduce friction for CVC teams. Our unique approach to technology scouting, partner identification, and expert engagement is designed to:
- Keep the innovation pipeline full.
While CVC teams focus on closing deals, Ezassi can help source and validate new opportunities that align with the company’s strategic direction ensuring no slowdown in momentum. - Connect with the right partners quickly.
Whether it’s identifying enabling technologies, breakthrough startups, or potential co-development partners, Ezassi excels in rapidly connecting CVC teams with the right market players. - Surface emerging opportunities.
Through advanced scouting methodologies and expert engagement, Ezassi can uncover market and technology trends, ensuring that CVC teams stay ahead of disruption. - Reduce late-stage deal failure.
By providing insights and third-party validation early in the process, Ezassi can help CVC teams align their internal stakeholders and external partners minimizing misalignment that often derails late-stage deals.
The pace of innovation will only accelerate, and CVC teams will continue to serve as critical drivers of growth. However, ensuring those teams remain focused, aligned, and consistently resourced is the difference between simply participating in innovation and truly leading it.
If your CVC team is looking to maintain momentum, overcome bandwidth constraints, and reduce late-stage deal failures, Ezassi is uniquely positioned to help. Let’s connect and explore how we can support your venture team’s success.