Raising capital from a corporate VC can bring many benefits beyond just money. Strategic CVCs, who measure ROI based on the strength of the strategic partnership with their portfolio companies as well as the financial return, will typically seek to maximize their relationships with startups for a long time after the investment is made.
Specifically, a CVC investor can offer the following to an entrepreneur:- Resources and product feedback. CVC parent companies often have deep institutional expertise and teams of subject-matter experts who can advise startups on product development and guide them through issues.
- Partnerships. CVCs can leverage their supply chain and operations to build new partnerships that otherwise may have taken months or years for startups to create.
- Distribution. Strategic CVCs can become a distribution channel for a startup, connect that startup with their suppliers, or even use the startup to become a channel for the parent company.
- Branding halo. If a large company is willing to invest in your startup, it’s a strong signal that your product is good and that your business has a bright future.
- Acquisition. Many CVCs invest in startups that they may want to acquire down the line. A CVC may also endorse an exit-seeking portfolio company to their partner companies or suppliers.