Creating Value Through Corporate Venture Capital Programs: The Choice between Internal and External Fund Structures

Asel, P., Park, H. D., and Velamuri, S. R. 2015. Creating Value Through Corporate Venture Capital Programs: The Choice Between Internal and External Fund Structures, Journal of Private Equity, 19(1): 63-72

Posted: 3 Feb 2016

See all articles by Paul Asel

Paul Asel

International Finance Corporation

Haemin Park

Drexel University - Department of Management

S. Ramakrishna Velamuri

CEIBS

Date Written: December 1, 2015

Abstract

We explore the appropriateness of structuring CVC units internally (the corporation makes investments off its own balance sheet) versus externally (the corporation, acting as a limited partner, endows a separate legal entity managed by general partners with capital to invest on its behalf). We study the implications of this structural choice on i) scope of investments, ii) balance between strategic and financial objectives, iii) performance measurement, iv) deal sourcing and due diligence, v) post-investment involvement of the corporation, vi) HR issues, and vii) exit considerations. We conclude with recommendations for corporations on when to employ internal versus external CVC structures.

Keywords: Corporate Venture Capital, Innovation, Strategic Investing

JEL Classification: G11, G24

Suggested Citation

Asel, Paul and Park, Haemin and Velamuri, S. Ramakrishna, Creating Value Through Corporate Venture Capital Programs: The Choice between Internal and External Fund Structures (December 1, 2015). Asel, P., Park, H. D., and Velamuri, S. R. 2015. Creating Value Through Corporate Venture Capital Programs: The Choice Between Internal and External Fund Structures, Journal of Private Equity, 19(1): 63-72, Available at SSRN: https://ssrn.com/abstract=2726380

Paul Asel

International Finance Corporation ( email )

2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States

Haemin Park

Drexel University - Department of Management ( email )

Philadelphia, PA 19104
United States

S. Ramakrishna Velamuri (Contact Author)

CEIBS ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

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