Fundraising Tip of the Week

💼 The Case for Corperate VC and Why They Invest in Early-Stage Startups

While traditional venture capital firms are the go-to option for most startups, there's another avenue that's been gaining attention in recent years: Corperate Venture Capital (CVC). Let’s talk about what exactly CVC is and how these investments differ from traditional venture capital.

🤔 What is Corperate VC?

Corperate VC firms usually sit within the structure of a large, established company. Most CVC firms draw money from their parent company for their operating budget. These investors often act as an avenue for large companies to maintain their core lines of business while remaining open to innovation and new opportunities. Some well known CVC firms, and the parent companies they operate under, include:

• Salesforce Ventures (Salesforce)

• M12 (Microsoft)

• Sony Innovation Fund (Sony Music)

🥅 What are their primary objectives?

CVC firms are looking for investment opportunities that will ultimately help their parent organization improve its bottom line. This is a major distinction between traditional VC and CVC; traditional VC firms are looking to maximize returns for their LPs while CVC firms are looking to maximize returns for their parent company.

As a result, CVC investors can often make a very powerful ally for early-stage startups, especially if said startup is building on top of the parent company’s product and services. A great example of this is Klaviyo, an email marketing app for Shopify, that received an investment from Shopify Ventures for one of their recent fundraising rounds.

✅ Is Corperate VC Right for you?

It depends; some early-stage startups can benefit greatly from working with CVCs. They can often provide a powerful boost in the form of partnerships, marketing, and customer relationships. However it’s important to keep in mind that their ultimate goal is to serve the needs of the parent company, so it’s important to make sure your long-term visions are aligned.

However, for the right kind of company, working with CVCs can provide a powerful edge over the competition. It is definitely a source of capital early-stage startups should consider in the right circumstances.

Read the full source article →

Founder Resources, News, & Events

🔗 Links to Share & Save

• a16z Blog: Pricing and Packaging Your B2B or Prosumer Generative AI Feature

• Forum Ventures: Pacific Northwest Founders: apply for a pre-seed accelerator and receive a $100k investment + mentorship

• Peter Walker (Carta): Fundraising cheatsheet for early-stage founders in 2024

Investors You Should Know

✨ Featured Investor of the Week

Each week we highlight an early-stage investor that is actively writing checks to Pre-Series A companies. If you’d like to request a warm introduction, reply to this email or click the “Request Intro” button!

Note: We use a double opt-in system to ensure warm introductions; you will only receive a reply if an investor has accepted your request.