Corporate venture capital
Corporate venture capital is a variant of venture capital in which the equity capital required to finance a mostly young company is provided by a company that is not active in the financial sector. This form of corporate financing takes place either in spin-off projects of the financing company, or external companies in the sense of start-ups .
Historical development
While corporate venture capital has been a common form of corporate finance in the USA since the 1960s, it only became popular in Germany in the 1990s. Probably the first German company to finance companies through corporate venture capital is Deutsche Telekom , which launched a corresponding program in 1997. As a result, other companies such as BASF , Siemens and Sixt participated with corresponding programs.
During the dot-com boom towards the end of the 1990s, corporate venture capital experienced increasing popularity, which initially waned noticeably after its end. In the meantime, there are numerous corporate venture capital programs, mostly for larger companies, which offer financing options for primarily young companies.
Goals and functions
In contrast to venture finance, which is issued by venture capitalists with the main goal of generating returns, corporate venture capital pursues additional and mostly overarching strategic goals: Established companies use this financing option to develop new technologies ("window on technology"), new business models and / or to get to know other markets or to diversify. Corporate venture capital is therefore mostly invested in companies that develop or offer complementary products or services in relation to the company providing the capital. Occasionally, corporate venture capital also aims to beat competitors in a specific market.
Conversely, through financing through corporate venture capital, young companies hope to gain access to technological know-how, sales channels and cooperation partners beyond the pure financing aspect. An investment by an established company should also often contribute to the reputation of the young company, which first has to gain the market's trust in its own products or services.
Structure of corporate venture capital programs
Corporate venture capital is issued to young companies in two different ways, mainly in structural terms. The first variant is the one that the capital-providing companies directly to the companies seeking capital company law involved. The advantage of this variant lies in the lower structural and administrative effort of the lending company, because the young company can use the existing organizational units of the lending company. However, there are disadvantages insofar as this variant often gives rise to multi-sided motivation problems and at the same time risks to the young company or its business activities can be kept away from the capital-providing company to a lesser extent. Furthermore, the mixing of resources of the capital-providing and capital-seeking company typically leads to difficulties in the company valuation , if a sale of such a company participation is sought.
In Germany, the second variant is therefore more common, in which the capital-providing company creates an independent organizational unit within its company with its own legal personality (e.g. in the form of a specially founded GmbH ), which in turn participates in young companies under company law.
Risks
In addition to opportunities, there are risks for both companies involved in a corporate venture capital transaction: From the point of view of the capital-providing company, a potential failure of the young company can damage its reputation. Furthermore, if the company providing the capital includes the young company's technology in its own marketing, it will later run into difficulties in marketing competing products or services from a company that is competing with the young company. From the point of view of the capital providing company, there may therefore be an unfavorable bond.
From the perspective of the young company, in addition to any problems in the area of implementing the support expected by the young company beyond the financial side, problems in particular in the event of an exit - i.e. a sale of the company - can arise. Selling to a competitor of the lending company is more likely not to agree, a sale to the lending company itself structurally includes the initial situation that a sale should be made to a so-called insider who knows the young company well and therefore has a stronger position in purchase price negotiations will occur.
See also
Individual evidence
- ↑ Corporate venture capital companies. In: www.bvkap.de. BVK eV, accessed on December 29, 2016 .
- ↑ Jonas Soluk, Christian Landau: Corporate Venture Capital in Germany - Empirical investigation of the use of venture capital as an instrument of strategic innovation management . In: magazine leadership + organization . tape 85 , no. 4 , 2016, p. 277-284 .
- ↑ Corporate Venture Capital - Window on technology and an instrument for strategic growth. Eckart, Köster & Kollegen, accessed on December 29, 2016 .
- ↑ Corporate Venture Capital (CVC) - deutsche-startups.de - News on startups, venture capital and digital jobs . In: deutsche-startups.de . ( online [accessed December 29, 2016]).
- ↑ Corporate Venture Capital - Window on technology and an instrument for strategic growth. Eckart, Köster & Kollegen, accessed on December 29, 2016 .
- ↑ What corporations really want from startups . In: Gründerszene Magazin . ( gruenderszene.de [accessed December 29, 2016]).