Many mature companies have implemented Corporate Venture Capital (CVC) programs, complementing internal R&D programs by investing in external knowledge. There are several reasons why CVC may achieve superior results over R&D alone.

First, corporate venturing provides an insight look at new technological developments and a path to possible ownership or use of new ideas, allowing companies to respond quickly to market transformations.

Second, corporate venturing can serve as an intelligence-gathering initiative, helping a company identify emerging competitive threats.

Third, by pooling its own capital with that of other venture capitalists, it is possible for a CVC program to magnify its impact, which can be particularly advantageous when technological uncertainty is high.

Finally, corporations may use CVC as leverage to encourage technologies that rely on the parent company’s platform.