Building Corporate Ventures Together: The Strategic Case for Partnerships
In today’s innovation ecosystem, corporate leaders are increasingly recognizing the limitations of going at it alone. Venture capital is facing challenges, and corporate innovation efforts often fail to deliver on their lofty promises. Traditional innovation exercises — especially those pursued in isolation — struggle to generate sustainable returns, leaving many corporations questioning where they went wrong. As large organizations grapple with this uncertainty, the solution may lie in a more collaborative approach: building ventures together with other corporates.
Corporate co-venturing offers a path forward by leveraging multiple companies’ unique strengths. These partnerships can drive innovation in a way that individual efforts cannot, pooling resources, expertise, and networks to create ventures that are more resilient and likely to succeed. However, such partnerships are not without their challenges. They require careful planning, clear governance structures, and alignment of goals to ensure all parties benefit.
In this article, we explore why corporates should consider co-ventures, the benefits of these partnerships, and how to set them up for success.
The Case for Corporate Co-Ventures
Why should corporations consider building ventures together? There are several compelling reasons:
1. Leveraging Combined Strengths
Corporate partnerships allow organizations to pool their unique strengths. Each corporate brings something different to the table — be it access to proprietary technology, a deep understanding of specific markets, or a robust distribution network. By combining these assets, co-ventures can tackle problems that would be insurmountable for a single organization.
For example, an energy company and a finance company might partner to create a venture that addresses green finance solutions, leveraging the energy company’s expertise in sustainability and the finance company’s ability to structure complex financial products.
2. Reduced Risk Through Shared Investment
Co-ventures allow corporates to share the financial burden. By distributing the investment across multiple parties, each company reduces its exposure to risk. The shared investment model also makes it easier for external investors to come on board, as the venture has the backing of several reputable corporates with smaller stakes rather than being dependent on a single entity.
This shared-risk model also provides a buffer against shifts in strategy. If one corporate partner decides to change its focus or exit the venture, the other partners can keep it afloat, maintaining momentum and ensuring continuity.
3. Stronger Governance and Founder Empowerment
One of the challenges of corporate venture building is governance. When a venture is backed by a single corporate, there is often a risk that the corporate’s strategic shifts or internal politics can stifle the venture’s growth. However, when multiple corporates are involved, governance structures can be more balanced. Each corporate keeps the others in check, ensuring that no single entity dominates decision-making. This also empowers the venture’s founders, who are less likely to be micromanaged by a single, overbearing investor.
In a co-venture, the founder operates much like they would in a typical startup, with the freedom to make strategic decisions in the best interest of the venture, rather than being beholden to one corporate’s internal agenda.
How to Build Successful Co-Ventures
Building a successful co-venture requires careful planning and execution. Here are key steps to ensure your venture-building efforts are successful:
1. Align on Strategic Objectives
Before embarking on a co-venture, corporates need to align on their strategic goals. What are the objectives of the venture? What problem is it solving? How does it align with each corporate’s broader business strategy? Without this alignment, the venture is likely to run into conflicts down the road, as each corporate pulls in a different direction.
Successful co-ventures require all parties to agree on a common vision and set of objectives. This alignment ensures that everyone is working toward the same goals, reducing the likelihood of conflicts and ensuring the venture remains focused.
2. Create Clear Governance Structures
Governance is critical to the success of any venture, but it is especially important in co-ventures. With multiple corporates involved, clear governance structures are essential to ensure the co-venture can operate efficiently and independently. This includes establishing a joint Investment Committee to oversee the co-venture’s progress, as well as creating decision-making processes that prevent bottlenecks.
Additionally, it is important to agree on how much control each corporate will have over the co-venture. Will they be equal partners, or will one take a lead role? These decisions need to be made early on to avoid confusion later.
3. Leverage Each Corporate’s Unfair Advantage
Every corporate involved in a co-venture brings something unique to the table. These “unfair advantages” — whether it’s access to a massive customer base, proprietary technology, or deep industry expertise — are what make co-ventures so powerful. However, to fully unlock these advantages, the co-venture must be designed to leverage its unfair advantages effectively.
For example, if one corporate has a significant presence in a specific market, the co-venture should be structured to tap into that market as quickly as possible. If another corporate has expertise in regulatory compliance, the co-venture should leverage that to navigate complex regulatory environments.
4. Maintain Flexibility
Flexibility is key to the success of any venture. As the market evolves and new opportunities arise, the venture must be able to pivot and adapt. This is particularly important in co-ventures, where multiple stakeholders are involved. By creating flexible governance structures and maintaining open lines of communication, the co-venture can remain agile and responsive to changing market conditions.
5. Empower Founders
Finally, it is essential to empower the founders of the venture. Founders need the autonomy to make decisions that are in the best interest of the co-venture, rather than being micromanaged by corporate partners. This autonomy not only increases the likelihood of success but also attracts top talent to lead the venture.
In successful co-ventures, the founder operates much like a startup CEO, with the freedom to make strategic decisions, but also benefits from the support and resources of the corporate partners.
Common Pitfalls and How to Avoid Them
While the benefits of co-ventures are clear, they are not without their challenges. Many co-ventures fail due to common pitfalls that can be avoided with careful planning and execution. These include:
- Unclear objectives: Without clear objectives, a venture can lose focus, resulting in wasted resources and missed opportunities.
- Slow decision-making: Bureaucracy and slow decision-making processes can stifle a venture’s growth. Co-ventures need to be structured to allow for fast, agile decision-making.
- Conflicting interests: If the corporate partners are not aligned on their strategic goals, conflicts can arise, leading to the co-venture’s failure.
- Failure to leverage corporate assets: One of the biggest advantages of any corporate ventures is the ability to leverage the assets of the corporate partners. If these assets are not fully utilized, the venture will struggle to compete.
The Future of Corporate Co-Venturing
Corporate co-venturing represents a powerful new model for innovation. By pooling resources, expertise, and risk, corporates can create ventures that are more resilient, more innovative, and more likely to succeed than those built by a single entity. This model is particularly well-suited to addressing the complex, cross-industry challenges that define today’s business landscape.
The key to success lies in careful planning, clear governance, and a shared vision. When done right, corporate co-venturing can unlock new growth opportunities, reduce risk, and drive innovation in ways that traditional models cannot. As corporates look to the future, co-venturing offers a path forward — one that is collaborative, strategic, and capable of delivering real value.
Conclusion: A Call to Action for Corporate Leaders
In conclusion, corporate co-ventures present an exciting opportunity for large organizations to innovate at scale while mitigating risk. By combining strengths, sharing investment, and empowering founders, co-ventures can unlock new growth opportunities and drive meaningful innovation. However, success requires careful planning, clear governance, and alignment of objectives.
For corporate leaders looking to build the next generation of ventures, now is the time to explore the potential of co-venturing. By partnering with other corporates, you can not only reduce risk but also create ventures that are more resilient, innovative, and impactful.
If your organization is ready to take the next step, reach out to potential partners and explore the possibilities. Together, we can build ventures that shape the future.
We are pleased to be an appointed venture studio of EDB’s Corporate Venture Launchpad 3.0 — a corporate venturing programme by EDB New Ventures, designed to empower companies to drive deeper innovation through venture creation and startup partnerships.
You can also find out more on our website.
Authors:
Sebastian Mueller, Founding Partner, Strategy & Ventures at MING Labs
Ziv Ragowsky, Founding Partner at Wright Partners
