What is a corporate venture?

Currently, all corporate innovation eyes are turned to the topic of “corporate venture” or “corporate startups” building. While many talk about it, there is still a lack of a coherent understanding of what the term corporate venture really means. Some use the term to talk about risky projects, others about outside-the-core ideas or separate legal entities. So what is a corporate venture? At Pioneers we set out to create our definition
– so here we go:

Difference to other corporate innovation terms

With the above definition, we want to make a clear differentiation from 5 other innovation activities or innovation types which are often mixed up:

1. Difference to “Startup Collaboration”

Touching on the first point “internally launched”, in our view, corporate ventures are kickstarted from within the company. With that said, we would not consider the collaboration of a corporate with an existing startup as a corporate venture unless both parties start working on a new idea together. If a company uses an existing solution of a startup or acquires it, we would categorize it as a Corporate-Startup Collaboration.

2. Difference to an innovation project

We aim to distinguish corporate ventures from internal innovation projects. Corporate ventures have their dedicated team (often including specific hires from outside) and operate highly independently from the core company. Many times, C-ventures are separate legal entities with a managing director hired for driving the venture. Internal innovation projects, on the other hand, are usually strongly linked with the core business. Project team members also work on other projects and are not “employed” by and for the project.

3. Difference to “New Products and Services”

Thirdly, regarding positioning, corporate ventures are not just another service added to the company’s portfolio with a new name (e.g. a loyalty program by a retail company). For us, a corporate venture needs to go further and offer a distinct branding and positioning with innovative solutions that add up to the core offerings. While some C-ventures enter into completely new business fields (horizon 3 innovation = new customers and offerings), others only target a new customer group or offer completely new services to existing customers (horizon 2 innovation).

4. Difference to “CVC” (Corporate Venture Capital)

Lastly, we want to make a clear distinction to CVC – Corporate Venture Capital. Operating a CVC unit or “doing CVC” is the practice of investing corporate capital into external, innovative companies. There are a few cases (e.g. rready AG from Swisscom in Switzerland) where CVC is invested in its own corporate ventures. In most cases, however, CVC is invested in external startups / scale-ups founded and grown independently from the company.

5. Difference to “Corporate Startups”

For us, there is no real difference. Some companies might only consider corporate ventures as corporate startups once they have a different legal structure. The characteristics for us, however, are the same: internally launched, own team & positioning as well as a distinct offering. 

What’s your definition of a C-Venture? Is there any other term we need to distinguish from corporate ventures?