Great post from an active corporate venturer on why and when corporate venture capital (CVC) can be a sensible alternative to M&A. He's honest about the potential pitfalls of CVC for business owners but also makes a good case for when it can be the best outcome for both parties.
Fred Wilson is an investment superstar. His funds have generated incredible returns for his limited partners and like most technology investors around the world, I’ve followed every word that he has written on AVC and spoken at conferences, looking for insights into his thinking and investment process. This includes his remarks at the CB Insights Future of Fintech Conference. Here’s what Fred said: [Corporate investing] is dumb. I think corporations should buy companies. Investing in companies makes no sense. Don’t waste your money being a minority investor in something you don’t control. You’re a corporation! You want the asset? Buy it. This one time, I disagree with Fred. Having worked as a private equity investor and more recently as a corporate VC (CVC), I have analyzed acquisitions and minority investments both from financial and strategic perspectives.