What corporate venture firms want from startups

Over the last decade, more and more startup founders have been eyeing the corporate world. Now, they aren’t looking to leave startups behind and work at a large enterprise. Rather, they are looking for new investment opportunities from corporate giants.

The sheer number of Corporate Venture Funds (CVCs) grew more than six times between 2010 and 2020 as such firms have become a fixture in the startup ecosystem, dishing out billions of dollars in funding each year. Tech giants like Google, Comcast, Salesforce, Qualcomm, and Airbus all have created their own startup-focused investment arms over the years. But their investment theses, focuses, and processes are different than what you typically see with more VC firms.

Unlike traditional venture capital firms, corporate venture capital (CVCs) don’t fundraise from limited partners, but instead those teams sit within a large organization’s overall org chart. That can give founders access to new markets and investors that can turn into customers. 

So why should a startup take the CVC route? We spoke to several firms to learn more about what they are looking for.


A Look At The Corporate Venture Landscape 

The Southeast is home to several CVCs, with a high concentration of them across the Metro Atlanta area. That makes sense, given the number of Fortune 500 headquarters that call the city home. 

Each CVC works with startups in different ways. On the investment side, Catalyst by Wellstar looks for seed stage through Series A startups, says Stefanie Diaz, Industry and Venture Lead at Catalyst and Senior Industry Discovery Manager at Wellstar. The team looks for “startup founders who solve critical problems and reimagine healthcare through technology.” 

Most CVCs give startups an injection of cash, but it is often common for firms to help founders land partnerships within the organization. 

“We value opportunities to work alongside founders and help grow their companies with financial investment and sweat equity in the form of innovation pilots in a healthcare setting,” John D. Cooper, Head of Venture Investment for Catalyst by Wellstar, added. “Innovating in healthcare is challenging; we excel working with startups that can benefit from having a partner like Wellstar, one of the largest health systems in the Southeast.”

John D. Cooper, Head of Venture Investment for Catalyst by Wellstar

Cooper said that an example of that kind of partnership is Catalyst’s recent investment into RIF Robotics, an ATDC HealthTech portfolio company. Through the Catalyst investment, RIF acquired more robotics equipment and started a pilot program within the Wellstar hospital system. 

BrightEdge, the venture capital and impact investment arm for the Atlanta-based American Cancer Society (ACS), is also looking for startups transforming the world of healthcare. Alice Pomponio, BrightEdge’s Managing Director, told Hypepotamus that the firm looks for founders that can improve ACS’s mission to “end cancer as we know it for all.” 

To date, BrightEdge has made 21 startup investments and its portfolio has already seen four exits. The firm looks for founders in 11 thematic areas, ranging from novel therapeutics diagnostics to social outcomes for cancer patients. The team also looks for early-stage investment opportunities and wants to participate in the “full lifecycle of the company,” Pomponio added.  


Beyond Investments

While both Catalyst by Wellstar and BrightEdge have a health focus, other corporations are focused on providing startups across multiple industries get access to more networking opportunities. 

EY, the global professional services company, has been working directly with entrepreneurs for four decades. Today, the organization has three distinct programs that support founders through opportunities such as mentorship, networking, visibility, and executive education.

“We connect today’s entrepreneurs with what they need to fuel their growth and realize their ambitions. All entrepreneurs are welcome to access EY’s vast resources designed for high-growth company leaders,” said Chevy Arnold, Entrepreneur Of The Year® Americas Deputy Director and Southeast Program. 

The EY Entrepreneurs Access Network (EAN) is a 12-month business accelerator program for Black and Hispanic/Latino CEOs. The EAN program addresses the four C’s, which are coaching, curriculum, community, and capital alignment, said Nit Reeder, EY EAN Program Director. To date, EAN has helped founders access approximately $27 million in funding, and the program is on track to help align an additional $12m this year, Reeder told Hypepotamus. 

Maranda Bruckner, EY Entrepreneurial Winning Women North America Program Leader, said that EY looks for “scalable companies that have the potential to grow with leaders who have the ambition and acumen to take them there.” 

The program looks for companies with at least $2 million in sales during each of the past two fiscal years. In order to stand out for the EY’s Entrepreneurial Winning Women North America program, leaders should be able to demonstrate “ambitious company growth goals, energy, creativity, entrepreneurial purpose and passion” and “have the maturity and level of business sophistication needed to interact effectively with potential investors, high-level business advisors and top executives,” Bruckner told Hypepotamus. 


Are There Any Cons? 

It’s important to note that most of these investment arms are often organized and run like startups operating inside of a large organization. That means there could be a lot of flux. Since it is just one part of a larger organization, the investment arms can be more susceptible to leadership changes and changes in corporate focus. That could be part of the reason why the total amount of corporate VC dollars going into startups dropped significantly over the course of 2022 and 2023, according to CB Insights

That makes it more important for founders to “understand the structure, the motivations and the history” of the CVC, said Aperture Venture Capital’s Managing Partner William Crowder on a panel at the Venture135 conference in Charlotte last month.

“They need to understand the expectations the CVC has for the investment,” added Cooper from Catalyst by Wellstar. “For example, some only want to invest in companies they have a business relationship with; they’ll predicate the investment on said relationship. While that can work for companies that have an existing relationship and are raising capital, for ones that don’t, it can elongate the investment process as you have multiple decision makers, who may be in different departments, that have to sign off on a partnership.” 


How Can Startups Stand Out? 

For Diaz at Catalyst by Wellstar, “passion” and “domain expertise” can help a founder stand out to corporations. 

“We enjoy championing founders who see the industry in a new way and have a clear execution plan. As the innovation and VC arm of a non-profit health system, we are focused on innovation that improves care and access for all while creating market value that can be re-invested in further innovation,” Diaz told Hypepotamus.

When pitching to traditional VCs firms, it is all about making the “dollars and cents” add up, said RareBreed Ventures’ Mac Conwell. But with a corporate VC, it is about showing how your startup is strategically aligned with that specific corporation. 

“It is about how you strategically help a corporation move forward, whether it is helping a core product they already have or how you introduce them to a new strategy of a new product line to grow,” Conwell said during a panel at Venture135.


Photo by Benjamin Child on Unsplash