In this post we will be analyzing how the Investment Duration creates a clear distinction between the regular VC's and the Corporate VC's.
Corporate VCs tend to have no Investment Duration.
By this we mean that when a player like Sonae IM invests, we don’t tend to have an investment duration in mind. By their own nature, regular VCs have fund durations, which means that they’ll invest in the first 2-5 years of the fund, grow the companies for the about 5 years, and focus on exiting the position in the last 4 years of the fund, sometimes extending the fund for a couple of years if they haven’t been able to sell their position in the regular timing.
Corporate VC’s tend not to act like that (and Sonae IM definitely doesn’t act like that). We pride ourselves on not having a set Duration.
Therefore, if your company is successful, we will ride the wave with you, no matter how long it is. This is what has happened with our Wedo Technologies investment, where Sonae IM has been an investor for almost 15 years. That’s a huge advantage for the entrepreneur, as he will not be pressured to fundraise or to "sell” our position to another investor.
This doesn’t mean that the entrepreneur cannot bring in another investor halfway through the company’s life, in fact, in most cases, it is even encouraged as a sign that the company has been achieving its’ milestones.
So when should you decide to approach a Corporate VC? Again, it all depends on the Corporate VC, but to approach Sonae IM for example you should have a very sector focused product, where you believe a strategic investor can really enhance your board by giving you sector specific insights, introduce you to sector experts that can complement your team’s skills and when you want to reinforce your company’s sales pitch with a very strong logo.
To conclude, a Corporate VC has numerous advantages over a regular VC, and both have their merits. Having said this, a Corporate VC might not be the best for your company. In fact, one of the best approaches an entrepreneur can have when fundraising is to bring in a mix of both. A great example of this was the approach that Movvo had, by bringing aboard both a corporate investor (Sonae IM) and a regular VC (Caixa Capital) hence bringing in the advantages of both models.So, is a Corporate VC good for you or not? Let us know by emailing us at firstname.lastname@example.org.
Stay tuned by Subscribing to our mailing list! We will keep on discussing relevant themes about Corporate Venturing and will also dive into the entrepreneurship scene, helping young companies to grow.
Think your idea might have a good fit with Sonae IM’s investment themes (Retail, Telco and Cybersecurity)? Does your VC firm need a strategic co-investor for a specific deal? Get in touch now!