Innovation Capitalsm
Synchrony’s Innovation Capitalsm platform helps companies quickly develop and field an effective corporate venture capital program.
Innovation Capitalsm is rooted in two basic principles. The first is that CVC investments should be driven primarily by the opportunity for the investor to partner with the portfolio company to co-create value rather than the pursuit of pure financial returns. Such partnerships can take many forms, but the simplest example is situations in which the investor becomes a customer or go-to-market partner with the portfolio company. In one such relationship, a corporate investor might partner with an entrepreneurial company as it finishes commercializing its technology. It would then include that technology in its own broader product or solution. The investor gets a valuable competitive advantage, and the portfolio company gets a customer whose interests are powerfully aligned with its efforts to effectively bring its new product to market.
The second principle of Innovation Capitalsm is that the corporate investor should only invest on an equal footing with other members of an investment syndicate, and on terms which recognize and respect their co-investors need to obtain a meaningful exit from the deal. In practice, this means that a corporate investor seeks always to partner with other venture capital investors by adding discreet value and diligently pursuing a ‘venture friendly’ investment process.
The key to succeeding as an Innovation Capitalsm investor is understanding that CVC is a tool to enhance a corporations access to new opportunities, not an exercise in asset management. As with any tool, it can be powerful when wielded correctly. It also poses risks if not respected. A well-aligned corporate investor can be an important ally to VCs and their portfolio companies, but only if the investor understands and respects the requirements of the venture capital investment cycle, and is willing to work diligently to keep the stream of opportunities flowing strongly.