Visualizing Strategic Value in CVC - an Impossibility or Solely a Consequence of Inadequate Practices?

Abstract: This paper presents empirical findings from a multiple case study inspired by a transactional design on strategic value within the field of corporate venture capital (CVC), motivated by its increasingly prominent role in enhancing the strategy of large corporations. Steered by an identified lack of knowledge about how to concretize and measure the strategic value created by CVC firms, the paper contributes with a conceptual framework primarily directed to the automotive industry. It aims to concretize the strategic value gained from participating in the venture capital (VC) ecosystem with the help of measurable KPIs. The research was conducted using primary data and secondary data; the former consisted of interviews with practitioners and industry experts and the latter of professional industry articles. Combined findings from primary and secondary data are divided into five different themes within the empirical section. The themes' content helps to answer the outlined research questions. First, the findings reveal three broad strategic rationales for large corporations to participate in the VC ecosystem; (1) to fill current capability gaps, (2) to find new growth opportunities, and (3) to prepare for disruption. Second, the findings disclose that there are multiple organizational arrangements of CVC firms. The unique setup of each CVC firm is driven by several factors, including the type of value sought, the brand image desired as an investor, and the arrangement's impact on the CVC firms', as well as the portfolio companies' performance. Third, the findings unfold how strategic value created could be concretized with help of quantitative KPIs suggested in the built conceptual framework. Lastly, the findings unveil that a balanced scorecard could be used to measure and communicate this value, both internally and externally.