Most organizations live in such limbo. They have open innovation programs that connect with startups and a professional investment branch with flashy investees. However, the effect isn’t felt in the business. The company keeps losing market share at a rapid speed.
This is the point where the need for innovation starts to permeate, not only the innovation department but every single group within the organization.
And it’s at this moment that startup investments start happening in parallel to the CVC. The need for quick incremental innovations is so acute that each department scouts and pushes for their picks.
These startups tend to fulfill specific needs each team has. In most occasions, they fit as optimizations or significant improvements of processes or products the company already has in place.
Some organizations end up killing their CVCs. In other cases, the CVC becomes a specialized unit that invests in future business models and disruptive technology. Good examples are Intel Capital, Google Ventures or Qualcomm Ventures.
The bottom line: The increased pressure most businesses are under is pushing for a company-wide struggle to invest in anything that can help them retain their market share. Hence why, while CVC investment is growing, direct Corporate investment is three times bigger and more common. It’s also important to keep in mind that CVC is very loosely defined, so the boundary here is still pretty muddy.