Creating Value Through Corporate Venture Capital Programs: The Choice between Internal and External Fund Structures

• S. Ramakrishna Velamuri 
• Paul Asel 
• Haemin D. Park 

Indexed by

ABDC-C

Abstract

We　explore　the　appropriateness　of　structuring　CVC　units　internally　(the　corporation　makes　investments　off　its　own　balance　sheet)　versus　externally　(the　corporation,　acting　as　a　limited　partner,　endows　a　separate　legal　entity　managed　by　general　partners　with　capital　to　invest　on　its　behalf).　We　study　the　implications　of　this　structural　choice　on　i)　scope　of　investments,　ii)　balance　between　strategic　and　financial　objectives,　iii)　performance　measurement,　iv)　deal　sourcing　and　due　diligence,　v)　post-investment　involvement　of　the　corporation,　vi)　HR　issues,　and　vii)　exit　considerations.　We　conclude　with　recommendations　for　corporations　on　when　to　employ　internal　versus　external　CVC　structures.

Keyword

• Corporate Venture Capital
• Innovation
• Strategic Investing

Author Community

Strategy and Entrepreneurship

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