Andover limousine airport .. Chicago Drug testing

Corporate Venturing For Emerging Growth Companies

The boom of the dot-com era in 1999 brought the emergence of corporate venture capital as a major source of funding to the private equity markets. Corporate venture investments peaked in the third quarter of 2000 with 608 deals totaling a combined $4.9 billion. A few of the top corporate venture capital investors of 2000 included Nokia Corporate ($500 million), Oracle Corporation ($400 million), Intel Corporation ($300 million), Sun Microsystems, Inc. ($300 million) and Daimler Chrysler ($100 million).

But as we all know, the dot-com balloon burst in the second half of 2000. By the second quarter of 2001, corporate venture capital activity dropped to just 172 deals worth approximately a combined $845 million. Not surprising because corporations historically jump into venture investments when times are good and exit quickly when times get rough. However, when compared to past decades, corporate venturing investment activities are still significant. Why? Though companies can readily pull back when necessary, they understand the value in pursuing new opportunities with strategic partners. Consequently, industry pundits expect corporate venture investment activities that show a financial return in addition to a strategic fit to rebound over time as economic conditions improve.

But what about corporate venturing for emerging growth companies -- companies that are not awash in cash or the beneficiary of an inflated stock value to use as currency for equity investments? Is corporate venturing available to them and is cash the only currency used for investment?

Definition

Corporate venturing provides an alternative to traditional methods of growing a company and is an alliance formed between two [or more] independent companies. Typically, a larger, more established company invests resources directly into a smaller company, and through the venture the two companies share the commercial risks and resultant rewards for mutual benefit.

Many companies due to their size, cash availability or even their structure can find difficulty in allocating appropriate funds, time or internal resources to developing products or services in-house.

A smaller company entering into a strategic alliance with a larger company can often times achieve a faster and higher growth rate than a company electing to move ahead independently. While larger companies frequently find the strategic alliance a more effective means of nurturing business growth outside of organic development and the more risky, expensive route of mergers and acquisitions.

Benefits

Is your emerging growth company interested in accessing funding and resources from another company to help revenue growth? If so, your company could benefit from a strategic alliance that brings:

Short or long term financing

Access to sales, marketing and distribution channels

Management and technical skills

Manufacturing facilities

All of which a larger already established company may be able to offer your company in exchange for a negotiated agreement to share in the planned development of current or future products. Therefore, your company must be willing to:

Enter into a detailed strategic alliance with the corporate partner

Agree to work productively and openly with the company

Is your emerging growth company successful but looking for innovation, additional channels of distribution or technical know-how to expand and grow your business even further at an accelerated rate? If so, perhaps your company can benefit from:

Access to external talent

Participation in emerging markets

Entrance into new markets or industries

Priority exposure to the development of disruptive technologies that could substantially change the industry

All of which a smaller, highly entrepreneurial company may be able to offer in exchange for your investment in this company, such as: access to your management and technical resources; cash; intellectual property; sales; marketing and distribution channels; or, operational facilities. As a larger company agreeing to enter into a strategic alliance with a smaller company, you must be committed to:

The long term relationship

Allocating the necessary resources to assist in the smaller company's operational and product development needs.

Methodology

Evaluate corporate venturing based upon your company's strategic long term needs.

Secure the absolute support from key top executives for the corporate venturing initiative.

Get the buy-in and commitment of all members of your leadership team to pursue corporate venturing opportunities on a regular basis.

Establish a clear and concise company corporate ventures' mission statement, such as we will "invest and partner with innovative companies that will successfully bring to market new solutions strategic to our core business."

Appoint a team with cross-functional capabilities and resources to pursue and evaluate corporate venturing opportunities.

Decide on an investment focus. Acquisitions require the most amount of capital. Participation in venture funds may also require significant cash. Direct investments may require less initial capital but allow the company to establish a relationship with a company of its choosing.

Take inventory of your company's available investment tools and needs. For example, cash isn't everything. Do you have IP, products, people or services to invest in the strategic alliance? You may find that there is considerable investment value in non-cash items. Or, you will be seeking access to new technology, distribution channels or product funding?

Establish and detail in writing an initial due diligence process that mirrors the company's strategic corporate venturing initiative. For example, if the opportunity is engineering oriented, have your engineering industry experts evaluate the investment's potential strategic benefits. Will it result in an expansion to the technology base? Will it give you access to external talent? Will it allow you to participate in an emerging market?

Establish your due diligence team and provide them with the necessary resources to do the job.

Establish a review process for all corporate venturing activities and evaluate quarterly with your leadership team.

Conclusion

Whether you are an emerging growth company seeking the alliance of a larger company or a larger company searching for priority access to new technologies under development by smaller companies, corporate venturing may offer your company new ways to realize long term growth. Through corporate venturing your technical team, sales and distribution channels, management expertise, technology base and access to capital may be expanded significantly thereby positioning your company for the future.

Good luck and good venturing!

Steven Mednick is President and Founder of Plenum Revenue Group, LLC. Based in Newport Beach, Calif., Plenum is a revenue development company for emerging and medium sized businesses. Working shoulder-to-shoulder with its clients, Plenum actively seeks out and delivers tangible business opportunities for its clients that drive incremental top-line growth and bottom-line results. For more information about Plenum, please visit http://www.plenumrevenuegroup.com or call 1.949.218.8657.

In The News:

SpaceX’s Dragon Endeavour spacecraft crewed by NASA astronauts Doug Hurley and Bob Behnken has docked with the International Space Station on its historic Demo-2 mission. .
As economic activity resumes in China following the first wave of the coronavirus pandemic, levels of the air pollutant nitrogen dioxide (NO2) are rising to traditional standards for the first time this year. 
SpaceX has launched NASA astronauts Doug Hurley and Bob Behnken on their historic Demo-2 mission to the International Space Station. The mission is the first time that astronauts have launched from American soil since the final Space Shuttle flight in 2011.
SpaceX and NASA are edging closer to the second launch attempt for the historic Demo-2 mission that will send astronauts Doug Hurley and Bob Behnken to the International Space Station.
SpaceX and NASA are keeping a close eye on the weather ahead of their second attempt at a historic crewed launch from Florida. The launch will see astronauts travel to space from U.S. soil for the first time since 2011.
The asteroid that slammed into Earth some 66 million years ago and wiped out the dinosaurs also produced a gigantic pool of magma many times larger than the crater at the center of Yellowstone National Park, new research reveals.
Ten percent of COVID-19 patients with diabetes die within one week of being hospitalized, according to the first study of the virus to examine its impact on hospitalized patients.
Two altars in an ancient shrine in Israel have been revealing their secrets.
A South Carolina town is investigating how a massive alligator was removed from a mini-golf course this week, according to local officials.
Elon Musk and President Trump have been working toward the common goal of sending American astronauts to space from U.S. soil, which could come to fruition on Saturday.

The Magic Of Exponential Business Growth

Is there a 'magical' way to exponentially grow your business?It's... Read More

Site Selection and Demographic Tips for Establishing Outlets

Many cities have home pages on the Internet. Many of... Read More

Why Create an Annual Plan?

Can you imagine going on a road trip without knowing... Read More

How To Prepare A Business Plan That Guarantees Big Profits

It is always said "If you Fail to Plan, you... Read More

Describing Intellectual Property in Your Business Plan

Most companies that are worthy of raising venture capital have... Read More

If You Dont Focus, Innovate and Evolve, You Die

After 128 years of business, a household word, Montgomery Wards,... Read More

College Students and Graduates to Run Company Outlets or Franchises

Does your overall business strategy include the recruitment of college... Read More

How To Leverage Your Current Ideas And Products Into Multiple Revenue Streams

Diversify - to make diverse, give variety, to balance, to... Read More

3 Ps of Planning - Prepare, Personalize, Pilot

Here's a really simple way to make sure your plans... Read More

Idaho Market for Automotive Businesses; Doing it Right

Anyone who has been watching the Idaho Market Carefully for... Read More

More Uses for Your Business Plan

You have invested a lot of time and energy on... Read More

Seasonality: Whats the Big Deal?

Do you work in or own a business that's affected... Read More

The Tables Have Turned - Its Officially a Sellers Market

Private equity firms have raised so much capital over the... Read More

GOT MEME? How to Attract Your Clients and Customers Attention

No "meme" isn't a typo and Got Milk, the more... Read More

Attributes of Companies You Dont Want to Buy!

There are no "rules of thumb" in the pursuit of... Read More

Planning for Success

Business planning is widely acknowledged as one of the keys... Read More

The Best Entity to Hold Real Estate

Possibly THE most frequently asked question of me is "What... Read More

Sales Planning and Business Plans

Writing a business plan can be tricky when all the... Read More

Leverage - A Small Step For You /A Big Change For Your Career

Cassy was an employee of a nonprofit who had been... Read More

SWOT Analysis Is No Magic 8 Ball

Q: A key investor in my business has suggested that... Read More

Microsoft Great Plains Implementation: Healthcare/Hospital example ? overview for consultant

Microsoft Great Plains fits multiple services market niche and healthcare... Read More

Balanced Scorecard Strategy Map

With the help of balanced scorecard strategy map, it is... Read More

Water Conservation and Water Issues for Mobile Car Washers and Auto Detailers

Obviously, there will never be an actual water shortage since... Read More

Don?t Just Talk About the Weather, Use It to Advantage

A well known, national chain of restaurants discovered that certain... Read More

Sony?s PSI Project

In 1989, Sony founded its Institute of Wisdom at the... Read More