Just like strategic investors tend to pay more than PE and VC professionals when engaging in M&A, so it seems do corporate venture capital (CVC) investors. They may also be acquiring larger stakes. The average investment size of corporate VCs in the previous quarter was USD 24 million, compared to USD 16.7 million from traditional VCs, according to CB Insights.
Corporate VCs are not only willing to write bigger cheques, they are also as a whole investing more these days, according to recent report from Exitround, which analyzes its own dataset. (See the green line in the above graphic).
They can invest more because there is a notion that it is wiser, easier, maybe even cheaper, for the likes of Google, Intel, Salesforce, Novartis and Siemens to fund hot startups than it is do internal R&D or build up riskier innovative business from within. Later on they can do business with the startups, acquire them, or sell them at a profit, although the last tactic is not typically their main one. The Economist says that fear is also a factor in CVC activity. (Image source: Exitround)