The New Corporate Venture Capital Model

For much of the last decade, corporate venture capital followed a fairly simple playbook. A large company created a venture arm. It hired a small team of investors. That team started attending the same conferences, meeting the same founders and, increasingly, competing for the same deals as traditional venture funds. The corporation provided the balance sheet. The venture team tried to behave like a VC.

That model is beginning to break. There are several signs that this model is beginning to break:

A. In the US, the number of active corporate venture units — defined by PitchBook as those making at least one new investment during the year — fell from 3,138 in 2022 to 2,030 in 2025, a decline of roughly 35%.

B. Several well-known companies have reduced or reconsidered their venture operations. BP recently proposed closing BP Ventures and selling stakes in more than ten portfolio companies. Intel decided to separate Intel Capital into an independent investment firm capable of raising outside capital.

C. TechNexus recently launched SecondWave to manage venture portfolios for corporations that no longer want to maintain the internal infrastructure required to manage them.

D. Pegasus Tech Ventures has built a “Venture Capital-as-a-Service” model through which corporations can participate in venture investing without building full internal investment teams.

E. Other specialist firms offer similar CVC-as-a-Service models covering sourcing, diligence, governance and portfolio management.

So why are corporations changing the way they participate in venture capital?

Why are these changes happening?

The venture boom of 2020–22 made corporate venture investing look deceptively easy. Capital was plentiful. Valuations kept increasing. Large corporations had strong balance sheets, and creating a venture arm provided both financial optionality and a visible innovation narrative. The environment today is different.

I believe the single most important reason is that technology cycles have accelerated dramatically. The half-life of technology is getting shorter. What looked like an interesting emerging technology three years ago can become either mainstream infrastructure or irrelevant remarkably quickly.

For a corporation, this changes the value of venture investing. The objective is no longer simply to build a portfolio of promising companies and wait for them to mature. It is to identify technologies that could matter to the business — and engage with them early enough to learn, experiment and act.

This puts pressure on the traditional CVC model.

A corporation is not necessarily good at venture investing simply because it has a large balance sheet. Sourcing startups, evaluating technology, pricing risk, negotiating venture deals, constructing a portfolio, managing reserves and eventually exiting investments are specialised skills. And they are skills that professional venture investors spend their entire careers developing. In that environment, the question facing a CEO is no longer simply: Why are we employing a team to recreate something professional venture investors already do for a living?

This may be the most important structural change taking place in corporate venture capital. Investment management and strategic innovation do not necessarily have to sit inside the same organisation.

The corporation can concentrate on something a traditional VC cannot replicate: understanding its industry, infrastructure, customers, supply chain and strategic problems. That is where corporate venture capital has an inherent advantage. The investment function, meanwhile, can increasingly be professionalised. The difficulty of operating a CVC organisation inside a large corporation is not theoretical. In the 2025 State of CVC study by Silicon Valley Bank and Counterpart Ventures, 51% of CVCs identified speed and efficiency as persistent challenges. This matters because venture investing operates on a different clock from most large corporations. A startup may raise its next round in weeks. A corporate procurement process may take months. A startup may change its product direction in a quarter. A large organisation may take years to change a strategic plan.

The result is an organisational mismatch.

And that creates an opportunity for a different model: let professional investors manage the investment machinery, while the corporation focuses on the strategic relationship. Fewer CVC units does not mean less corporate appetite.

This distinction is important because fewer CVC units does not necessarily mean less corporate appetite for startups. Global Corporate Venturing estimates that corporate investors participated in more than 5,000 startup funding rounds in 2025 and that the value of corporate-backed rounds increased approximately 75% from the previous year. Its data suggests that roughly one in five startup funding rounds now includes a corporate investor.

The pattern therefore looks less like withdrawal and more like bifurcation.

At one end are the corporate venture arms created during the easy-money period without sufficiently clear strategic mandates. Many of these are likely to disappear, become independent, or outsource their portfolios and investment management. At the other end are companies for whom venture investing is genuinely connected to the operating business.

Those programmes are becoming more focused, not less important.

What is changing is not simply how much corporations invest, but how they invest.

The surviving CVCs are likely to become more selective, with greater emphasis on companies that are strategically relevant to the operating business and on investments where the corporation can provide something beyond capital. That is a very different proposition from simply running a corporate version of a traditional VC fund. The investment moves closer to the business. The second model is particularly interesting because it moves venture investing closer to the business itself.

Consider ABB. Rather than maintaining a completely centralised venture function, it has allowed operating divisions to make investments from their own balance sheets.

The logic is powerful: the business unit making the investment also owns the strategic rationale and ultimately has to make the relationship work. This is important because the real value of corporate venture capital often appears after the investment.

• Can the startup become a supplier?

• Can it become a customer?

• Can its technology be deployed across the corporation?

• Can the corporate investor help the startup enter a new market?

• Can the relationship generate learning that would otherwise take years to acquire?

But generally speaking, the corporation of the future may invest more- while employing external investors. This may be where the corporate venture model is ultimately heading. The investment decision moves closer to the business, while the investment machinery becomes increasingly professionalised. Some sophisticated CVC organisations will continue to do both extremely well. But most corporations will not need to; they will have external managers.