Abstract
This paper proposes an novel methodology to support corporate venture capital (CVC) investors in assessing and planning uncertain investments in innovative technologies and/or start-ups.
Our approach expands current practice in three ways:
- It is designed for investors wishing to leverage innovation as a strategic competitive advantage. Unlike traditional venture capital, corporate investors are often more interested in developing technological synergies rather than obtaining rapid profits by exiting their positions. The process thus calls for a special focus on identifying synergies that new technologies could contribute to enable business strategies.
- It focuses on a technology-implementation-commercialization (TIC) approach, which recognizes that corporate investors may not be concerned with a "product" in the conventional sense, but may rather implement innovative technologies in their business processes. In other words, corporate investors may forgo to deploy innovation to "market" at scale but rather "commercialize" the results by integrating them in their operations and/or offerings to gain a competitive advantage. In short, we broaden the "product" and "market" concepts commonly used in the literature to those of "implementation" and "commercialization".
- It allows for the definition of "dynamic business plans" to explicitly integrate flexibility in how investors can grow, pivot or exit their investments based on how technological and market circumstances will evolve. A key improvement to traditional business plans which are based on pre-defined scenarios and sensitivity analyses and do not allow for taking full advantage of future developments and thus leverage a more flexible approach to innovation.