By Gary Dushnitsky
In a recent Business Strategy Review article, London Business School professor Gary Dushnitsky notes that corporations across a wide array of industries are adopting a venturing approach. Corporate venture capital (CVC) is increasingly regarded by organisations as a vital weapon in their entrepreneurial and innovation armory. About 20 per cent of the Fortune 500 have created a CVC unit, according to a 2009 study, including such firms as BASF, Cargill, Dow, Deutsche Telekom, Intel, Johnson & Johnson, Reed Elsevier, Siemens, UPS, and others.
Professor Dushnitsky debunks some common myths regarding corporate venturing. He observes that CVC units are becoming an integral part of firms’ innovation strategy: while the average lifespan of CVC unit was 2.5 years during the 1990s, it has almost doubled to 3.8 years during the 2000s, with more than 40% investing continuously for four years or longer. Moreover, mirroring the ever globalizing venture capital market, professor Dushnitsky finds that the fraction of CVC investments in US-based ventures declined from 88% (1991–2000)to 75% (2001–2009).
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