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Complimentary value-adding roles of corporate venture capital and independent venture capital investors

In the last five years, corporate venture capitalists have become an increasingly important source of finance for new technology based firms. Earlier research suggests that both independent venture capitalists and corporate venture capitalists often provide valuable value-added benefits for their portfolio companies. However, there is little research that actually compares and contrasts the value-adding capabilities of independent venture capital and corporate venture capital investors. In this paper, Markku Maula and Dr Gordon Murray focus on the differences in the value-added benefits provided by the two types of investors to their portfolio firms.

In the last five years, the US and Europe have each seen a huge increase in the amount of in-vestment activity undertaken by large corporations seeking to act like traditional venture capital firms. 1993 was the low point of the last twenty years with only 25 active CVC funds investing approximately $50 million. In the following seven years, corporate venture capital-ists' investment activities have grown over 300 fold. In 2000, nearly four hundred separate CVC organizations invested a total of $18 billion worldwide. This latter figure represents about fifteen percent of all venture capital and private equity investments made by US & European investors, and an even higher share of exclusively technology investments. This level of investing is a record high for corporate investments in a year which also saw the highest level of venture capital financing in the history of the US venture capital community. 

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