Working Paper on Organizational Dynamics within Corporate Venture Capital Firms

TL;DR

This paper investigates how corporate venture capital firms operate successfully amid rapid growth, revealing operational misalignments and strategic challenges through interviews with industry insiders.

Contribution

It provides new insights into the internal dynamics and strategic misalignments of corporate VC firms during a period of industry expansion.

Findings

Operational coherency issues identified in many firms

Conflicting incentives among investment teams

Misalignment linked to lack of executive commitment

Abstract

Corporate venture capital is in the midst of a renaissance. The end of 2015 marked all-time highs both in the number of corporate firms participating in VC deals and in the amount of capital being deployed by corporate VCs. This paper explores, rather than defines, how these firms find success in the wake of this sudden influx of corporate investors. A series of interviews was conducted in order to capture the direct and indirect objectives, philosophies, and modes of operation within some of these corporate VC organizations. During the course of this exploration, numerous operational coherency issues were discovered. Many firms were implicitly incentivizing conflicting and inconsistent behavior among their investment team. Perhaps most surprising, the worst offenders were the more mature corporate VCs who have been in the game for some time. As will be discussed, fundamental evidence suggests that this misalignment is due to lack of attention and commitment at the executive level as corporate strategy evolves.