Philosophy & Guiding Principles

At Synchrony, we believe best practices require respect for certain fundamental principles.

  • Strategic, not financial, value is the driving factor in engagements between corporations and entrepreneurs. While making equity investments is critical in order to become a full-fledged stakeholder in the innovation ecosystem, the essence of CVC investing is not to maximize financial ROI but rather to generate strategic value for the firm. When CVC practitioners lose sight of this core principle by chasing investment returns rather than strategic value, they quickly stray from creating value for their parent company.
  • In order for a CVC program to realize its full potential as a reliable producer of innovation within the enterprise, strategic value must be clearly identified, articulated and tracked; our Innovation Capital™ method is designed for this.
  • While corporate investors can be valuable contributors to the innovation ecosystem, they are inherently subsidiary players innovation ecosystem. In order to be successful over the long haul, CVC players must conform to the rules of venture capital and entrepreneurship; it is impossible to succeed in CVC without deeply respecting that you’re playing on their turf.
  • Strategic investing is a long game, not a transaction, or even series of transactions. CVC is inherently a portfolio activity. The measure of success isn’t any single deal, or group of deals; it’s whether the portfolio as a whole produces value over time.
  • Strategic investments/partnerships must confer value to all parties – the corporate investor, the entrepreneurial firm, and the entrepreneurial firm’s shareholders. Successful strategic investors take great pains to ensure that all stakeholders benefit by working hard to foster the success of their portfolio companies. This includes not behaving in ways that threaten the company’s development or exit, and strongly resisting any effort by internal stakeholders to take advantage of the power imbalance inherent in CVC-based partnerships.
  • Our client relationships work best when the relationship is long-term, and incentives are aligned. Although we do occasionally support clients’ strategic investment efforts with limited-term engagements and narrowly-defined deliverables, we are most valuable to a client when there is a long-term relationship with well-aligned incentives.

Synchrony White Paper

whitepaperOur latest White Paper: Innovation Capital™: An Empirical Framework for Screening, Selecting & Measuring Strategic Investments, is now available.

The recent global focus on the importance of innovation has once again placed corporate venture capital (CVC) in the spotlight. With a burst of new programs and the recommitment of long-time players, CVC is certainly back - but with significant differences than in its earlier incarnations.

Read the whole story by downloading our whitepaper today.