How Corporate Venturing Is Accelerating The Growth of Indian Startups

Backed by favourable demographics, improving business culture and increased participation by VC firms, the Indian startup ecosystem is growing leaps and bounds.

Due to this growth, Indians startups have captured the eyes of major corporate venture capital companies.

In recent years, corporate venturing has become a major funding source for Indian startups. These corporate venture capital (CVC) provide smart capital rather than just capital, enticing Indian startups to partner with them.

That is why several Indian startups are opting for corporate venture capital nowadays and leveraging their expertise, a network of connections and funds to grow.

Corporate Venturing

Corporate venturing is the practice where a corporate venture capital company (CVC) invests its funds directly into a private enterprise or a startup.

Usually done by large organisations, corporate venturing enables organisations to invest in innovative startups to gain a competitive advantage as these startups can become potential competitors in the future. It also enables corporates to strategically expand and explore new markets.

By leveraging money and their expertise, organisations make deals with innovative startups and use their resources like Proprietary technology, in-demand product, etc., to stimulate growth, gaining competitive advantage, enter new markets, increase market share and more.

But what’s in it for startups?

A corporate venture capital company usually provide the startup with funding, strategic direction, management and marketing expertise.

Benefits Of Corporate Venturing For Startups

As the majority of these CVCs are run by large conglomerates, startups get to reap the benefits of their brand name, market expertise, a network of connections, stable financial position, and a plethora of developed products.

Moreover, if things go well, this business partnership can lead to a connection between the CVC and its parent firm, instantly boosting a startup’s value.

Corporate venturing is a win-win deal for both the startup and the Corporate innovation. For the startup, corporate venturing provides a significant boost during their early stages, while corporations get innovative products and solutions as part of the deal. Corporate Venture Capital also provides startups with a live business environment. Leveraging corporates’ resources, startups can test, improve and iterate their products or services, which can be extremely important for startups targetting the B2B market.

Growth of Corporate Venturing In India

As per the data from Inc42, CVC funding participation in startups is growing at an annual average growth rate of 7%. Also, 39 active CVCs in India have invested in 144 Indian startups for the period between 2015 to Q3 2020. Around 31 startups got funded annually via CVCs in India between 2015 and 2019 on average.

In April 2021, Amazon India announced a $250 million ‘Smbhav venture fund‘ to invest in Indian startups and entrepreneurs focused on tech-led innovations. Amazon and other global tech firms like Microsoft, Google, and Qualcomm support the Indian startup ecosystem through corporate venturing.

Few Notable Corporate Venture Capital firms are