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Why Venture Strategies?

The most successful companies are those that have developed aggressive venture strategies and have made ventures critical components of their strategic and operating success. For today's corporations, traditional internal expansions, efficiency improvements and "synergistic" acquisitions are no longer sufficient sources of growth in most industry segments that had grown crowded and hypercompetitive. The new challenge is to search for emerging "white space" opportunities, "new-business creations that would meet the unmet, unserved needs of customers in emerging markets¹."

In ventures, large and midsized companies can discover a source of growth they are striving to achieve. New business creation has become central to achieving strategic and financial objectives of market champions. "Silicon Valley wouldn't exist if big companies could identify technology and market opportunities and move with speed to capitalize on them", says Mike Moritz of Sequoia Capital Partners.

In-Company Ventures (more)

To achieve their growth objectives through in-company ventures or in-company startups, many corporation may need to change their mindset and organization concept, loose controls and provide an enabling environment to empower the venture manager. They need also to adopt the business systems approach to managing projects aimed at development of innovative products or services.

Spinouts (more)

By 2000, spinouts, a new form of creating and financing a high-tech company has become more popular. This novel approach has a number of advantages over a merger or acquisition and it plays an increasingly high role for high-tech companies.

A spinout enterprise differs from a spin-off. Spinouts remain closely tied to the company that developed them. In most cases, the ties are both financial and operational. Financial ties can be enforced through interlocking of stock ownership and financial oversight by the parent company. Operational ties may include shared professional and administrative services as well as marketing and leadership support.

New ventures established as independent companies can more readily fulfill their potential. In this case, the entrepreneurs do not have to argue with superiors or put up with interference.

Corporate Investing in External Ventures (more)

External venture investing in new technologies and emerging markets has become a vital component of corporate strategies in the new economy driven by small innovative firms. Partnership between small innovative firms and large corporation is mutually beneficial. While entrepreneurial companies can identify  technology and market opportunities and move faster to capitalize on them, they can achieve enormous leverage through technology and distribution agreements with large global corporations. Herein lies strategic opportunity for large corporations.

In United States in 1994, only 2% of venture capital investments was corporate venture capital, but in 2000, corporate venture capital accounted for 17%, nearly $20 billion.

Joint Ventures

Mergers

Acquisitions

Managing Projects as External Ventures

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