Founders hunting down capital in the middle of this pandemic may feel like they’re on a fool’s errand, but some investors are still offering financing, even if the terms might not be as good as they once were. One avenue that appears to remain open: corporate venture capital.
The corporate route offers its own set of unique challenges, depending on the philosophy of the organization’s investment arm. Some are looking strictly for companies that fit neatly into their platform, while others believe a solid investment is more important than a perfect fit.
Regardless of style, these firms want their investment targets to succeed on their own merits, rather than as part of the organization the funding arm represents. To get the lay of the land, we spoke to a couple of firms that take very different approaches to their investments: Dell Technologies Capital and Salesforce Ventures.
Corporate venture is a different animal
Corporate venture funds aren’t typically as large as private ones, but they have a lot to offer, such as global sales and marketing support and a depth of knowledge that offers direct benefits to a young upstart. This can help founders avoid mistakes, but there is danger in becoming too dependent on the company.
The good news is that these companies are often not leading the round, but are instead providing some cash and guidance, which leaves entrepreneurs to develop and grow on their own. While the pandemic is forcing many changes in approaches to investment, the two corporate venture capital firms we spoke to said they will continue to invest, and their theses remains pretty much the same.
If you have an enterprise focus and you can convince these firms to take a chance, they offer some interesting perks a private firm might not be able to, or at the very least provide a piece of your funding puzzle in these difficult times.