In this conversation, Jay Eum shares his insights into the transformation of CVCs over two decades, offering guidance for founders engaging with corporate investors and navigating today's unprecedented market conditions.
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Corporate venture capital has historically struggled with reputation issues, often labeled as "dumb money" with slow decision-making processes that hindered competitiveness. Few have witnessed this landscape's evolution as comprehensively as Jay Eum, founding managing director of GFT Ventures and veteran of three distinct venture initiatives.
Modern CVCs often operate independently from parent companies while maintaining strategic access, representing an evolution from earlier, more strategically rigid models.
Because reputation determines deal quality and access to competitive investment rounds, building trust within the startup ecosystem remains a priority for CVCs.
Hard tech founders should approach CVCs at the proof-of-concept stage rather than too early, demonstrating value before exposing innovative ideas.
Founders should pursue domains where they have genuine expertise, rather than chasing hyped sectors, even during periods of extraordinary market growth.
It's no secret that corporate VCs had a pretty dismal reputation twenty years ago. They earned labels as "dumb money"—slow-moving, strategically rigid entities with decision-making processes that dragged on endlessly. Because business units needed to approve investments, these early CVCs rarely moved quickly enough to compete for quality deals.
The second generation brought meaningful improvement. CVC 2.0 created separate investment entities with formal LP/GP structures, measuring both strategic benefits and financial returns rather than focusing exclusively on strategic alignment. This shift enabled these organizations to attract better talent from the traditional VC world, elevating the overall quality of corporate venture investing.
Today's most evolved CVCs often take a counterintuitive approach—they intentionally distance themselves from parent companies. Examples like GV make their financial focus clear while positioning parent company connections as a secondary benefit rather than the primary value proposition. This separation allows them to compete more effectively for early-stage investments without the baggage that once made founders wary of corporate investors.
Another compelling example is Next 47, backed by Siemens. Most people don't immediately connect Next 47 with its parent company, which is precisely the point. They've branded themselves to operate independently while maintaining the ability to leverage relationships within Siemens and across any relevant industry connections that might benefit portfolio companies.
Samsung Ventures demonstrates how strategic coupling can work exceptionally well when executed thoughtfully. Before launching in the US in 2003, Samsung spent a full year benchmarking how Intel, Qualcomm, Microsoft, and other corporate VCs structured their operations. They'd already tried business-unit-led investing and discovered the fundamental problem: people move around within corporations, leaving portfolios of companies without anyone to maintain the relationships.
At the corporate level, Samsung made a decisive move. They created Samsung Venture Investment Corporation as a separate entity, hired professional investment managers as GPs, and had interested Samsung operating companies participate as LPs. That structure, now over 25 years old, has proven remarkably durable—growing from roughly $300 million in assets under management to well over $3 billion.
Next 47 represents a different but equally valid approach. Operating independently from Siemens while leveraging the mothership's resources, they've positioned themselves to connect startups to Siemens business units and to any relevant corporate partners. The value proposition extends beyond a single corporate relationship.
What becomes clear from these examples is that there's no universal blueprint. The right model depends entirely on corporate objectives, and perhaps more importantly, on executive leadership maturity. The most innovative CVC structures require corporate leaders willing to tolerate independence, embrace approaches that may look unconventional from the outside, and maintain strategic alignment.
When beginning their journey, many new CVCs stumble. They pour resources into deal sourcing—attending conferences, building relationships with accelerators, and establishing themselves in the startup ecosystem. But they neglect the receiving end of their own organization. When they find promising startups, those opportunities bounce right off the wall because internal teams aren't prepared to evaluate them.
Imagine a CVC unit discovering a breakthrough in robotics. If the receiving business unit hasn't figured out how this fits into their product roadmap or technology development strategy, that amazing opportunity goes nowhere. The startup gets evaluated slowly or not at all, and eventually, the relationship withers.
Successful CVCs establish clear strategic roadmaps before actively seeking startups. They identify specific product and technology gaps they're trying to fill, new business opportunities they're pursuing, and allocate resources internally to process incoming opportunities. This preparation proves just as important as external scouting.
Resource allocation should balance both sides of the equation. Without establishing proper processes for internal teams to quickly evaluate and respond to opportunities, even the most promising startup connections won't deliver value to either the corporate or the founder.
Every corporation has a corporate image and reputation, but that doesn't automatically transfer to its venture arm. A CVC might inherit some initial benefit from a strong parent brand—think BMW's reputation for innovation—but they still need to prove themselves as good citizens in the startup community.
The VC community operates as an extraordinarily tight network. Founders talk to each other. Investors talk to each other. One misstep, one broken commitment, one story about a CVC trying to extract value without contributing, and suddenly you're labeled as the firm nobody wants to work with.
CVCs with poor reputations face adverse selection. They only see deals that got rejected everywhere else. Meanwhile, respected corporate investors gain access to competitive rounds because founders actively seek them out.
Trust-building requires consistent behavior over time. Founders validate potential CVC partners by speaking with other entrepreneurs who've worked with them. They want to know: Does this corporate investor actually deliver value? Do they respect confidentiality? Do they follow through on commitments? These aren't things that develop overnight, and they're remarkably easy to destroy.
Let's go over timing—it matters significantly when approaching CVCs. Going in too early often means exposing your innovative ideas without proper evaluation—you're essentially letting them know you're working on something interesting before you can demonstrate its value. CVCs at that stage often lack the framework to properly consider early concepts.
The better approach: wait until you reach proof-of-concept stage. Get there through bootstrapping or financial investors, then approach CVCs when you can show data demonstrating you're on the right track. If you're doing something genuinely valuable, multiple strategic investors will express interest, giving you options.
For hard tech founders in concentrated industries, the dynamics shift. If you're developing cutting-edge microprocessors and need access to two-nanometer manufacturing, there are literally only two options in the world. Your choices become limited by market structure, don't depend on preference.
In these situations, reputation research becomes critical. Talk to other entrepreneurs in your domain who've worked with potential CVC partners. You'll learn what to expect, how long processes take, and what commitments you can rely on. Most founders in concentrated industries understand these dynamics going in.
Here's something that surprises many founders: most traditional VCs actually view CVC interest as positive validation. Unless a VC is extraordinarily deep in your specific technical domain—and few are, given portfolio diversification requirements—they want to see potential design partners or customers engaged. If those partners happen to have CVC arms that want to participate, that's typically a positive signal rather than a red flag.
We're living through genuinely extraordinary times. The revenue growth happening in certain sectors defies historical patterns—Jay mentions portfolio companies scaling from zero to $70 million in under six months. These aren't projections or aspirational goals. They're actual results.
What's driving this isn't irrational exuberance. The market has become remarkably educated about value creation, particularly in understanding the real infrastructure costs associated with AI inference. Unlike traditional enterprise software, where you can essentially copy and paste with minimal incremental cost, AI applications carry genuine inference costs with each use. Customers understand this and demonstrate willingness to pay for the massive utility they're receiving.
But competition among top-tier funds has reached concerning levels. We're seeing behaviors reminiscent of the dot-com bubble—junior partners stalking founders at airport security lines, $100 million seed rounds, and aggressive tactics driven by FOMO. If you're managing a massive fund competing to get into high-growth companies, the pressure becomes intense.
There'll always be the next hot, exciting thing. Right now, certain sectors are experiencing hypergrowth that makes headlines and attracts attention. But founders need to stay in their lane—you won't be competitive going after spaces where you lack experience, expertise, or network.
While there are super exciting high-growth opportunities, there is plenty of growth in vertical-specific domains. These opportunities often get overlooked in favor of whatever's generating buzz, but they offer more stable trajectories and potentially faster paths to profitability.
The winning combination often looks like this: a founder with a decade or more in a specific industry, paired with a technically brilliant co-founder, applying cutting-edge technologies to problems they understand intimately. That combination creates tremendous value, even if it doesn't generate the same headline-grabbing growth numbers as the hottest sectors. This mission-driven approach often yields more sustainable businesses in the long run.
Corporate VCs have transformed from their "dumb money" origins into sophisticated, founder-friendly entities—at least the best ones have. But that evolution doesn't mean founders should chase CVC relationships indiscriminately or approach them without careful consideration.
Success requires understanding which model of CVC you're dealing with, evaluating their reputation through conversations with other founders, and approaching them at the right stage of your company's development. For hard-tech founders especially, strategic corporate relationships may prove inevitable, making partner selection and timing even more critical.
Despite the current market creating unprecedented opportunities, the fundamentals haven't changed: maintain focus on your core expertise, build something genuinely valuable, and strategically leverage appropriate corporate partnerships when they align with your objectives. The most successful founder's journey often involves building a strong community around your innovation while staying true to their mission.
Investing globally since 2001, BASF Venture Capital backs startups in Decarbonization, Circular Economy, AgTech, New Materials, Digitization, and more. Backed by BASF’s R&D and customer network, BVC plays an active role in scaling disruptive solutions.
A premier international law firm with deep expertise in Corporate Venture Capital, WilmerHale operates at the nexus of government and business. Contact whlaunch@wilmerhale.com to explore how they can support your CVC strategy.
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