Internal corporate ventures capital

Corporate venture funds are venture capital funds financed pardy or entirely by industrial companies. They are ideally managed using the same financial criteria as venture capitalists would apply but, in addition, they have a strong relationship with their industrial investors. The startups funded then benefit from the investors industry knowledge, while the industrial investors not only receive a financial return but also better information from the market to use in external and internal investment decisions. They can provide access to new technologies and allow companies to build an external network by, for example, cooperating with a number of different startups. This has given some corporations access to important deals in return for a relatively small investment. 

A corporate structure that copies the venture capital approach seems to be the most effective way to achieve these objectives. The new business - a relatively independent entity, as described above - is controlled by the parent company through staged financing, given when pre-agreed milestones have been reached. These should include not only internal milestones defined, for example, by specific R D achievements, but also externally driven ones reflecting important steps towards market success, based perhaps on initial results of user tests, consumer research results, competitive benchmarks, and so on. The parent company should supply services to the new business on the basis of well-defined price and resource agreements. 

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