The Problems for Corporate Investors
For all of its opportunities, the fact that creating and managing a CVC program is so radically different than all of the other activities which drive success in the modern enterprise presents tremendous challenges. CVC is so different, in fact, that a strong case can be made that the more well-managed a firm is in its day-to-day operations – the more it successfully focuses on executing its core business plan, meeting its targets and strengthening its position in the marketplace – the more difficult a time it is likely to have at succeeding as a corporate investor.
In addition to the intrinsic challenges, long and painful experience has taught the venture capital community to be wary of the incentives, commitment and capabilities of corporate investors. These concerns are legitimate – corporations have often had a tendency to be inconsistent in their investing activity and unreliable as syndicate partners. Such wariness is particularly problematic for problematic firms which wish to participate in an industry that has the kind of unwritten rules of trust that allow even the fiercest competitors to join together in the same investment syndicate. As a result, it can take a new corporate investor a long time – as long as several years – to get to the point to where top-tier firms will consider them viable as an investing partner. Given the pressure to perform, CVC units often don’t have that much time – a dynamic which only reinforces the problem.
By partnering with us and implementing our Innovation Capitalsm platform, Synchrony’s clients communicate their commitment to creating value for their portfolio companies and co-investors, and to venture capital best-practices.