There are three ways large companies can grow their business: build it from scratch, buy it, or gain strategic alignment with other companies through partnerships. However, creating something from scratch is often too long, and M&A is sometimes not an option. When this occurs, there is still a way to leverage someone else's technology for faster growth. In this article, Larry Forman, Senior Manager and head of the ecosystem for Deloitte's New Venture Accelerator, discusses the corporate venture strategy.
"Don't try to be a venture capitalist unless you are going to hire a team of VCs to run the fund for you or you may be disappointed." - Larry Forman
The corporate venture strategy involves interacting and forming relationships with venture funds. It is used by corporations wanting to access different ecosystems and technology without building it themselves or acquiring the company. There are various ways to approach this strategy.
Regardless of what approach a company takes, there are many reasons why organizations should look into corporate venture strategy. Here are the significant benefits:
While corporate venture strategy is highly beneficial, Larry doesn't recommend companies becoming venture capitalists, especially for first-timers. It is highly complex and would require a team to be effective. Instead, the best way to learn and gain experience is to partner with venture capitalists and see what they're doing first.