What is the role of corporate venture capital?
Corporations with corporate venture capital (CVC) programs invest monies in start-up companies in exchange for an equity stake in the business. By doing so, they may gain access to new ideas and technologies or possibly support for their own business objectives. In some instances, the result is symbiotic; producing something neither company could on their own. Other times, the corporation’s interest in the start-up may be more for fact-finding than financial gain and sometimes it may even be to thwart a rival company’s opportunity.
CVC groups can do more than just fund a start-up, they can also provide relevant industry experience and access to R&D, marketing, and distribution channels that may not be available to smaller start-ups without the same level of resources and relationships. Further, the CVC’s investment can help validate the start-up, which may improve it’s chances at receiving additional outside funding.
Lilly Ventures, a CVC, is a venture capital arm within the Eli Lilly and Company corporation. This branch acts like a venture capital (VC) firm in funding start-up companies in fields relevant to Lilly. These investments have allowed them to benefit from the innovations of the start-ups, providing an “ecosystem that helped broaden the market for the parent company’s products.”
What is your assessment of Lilly Ventures?
Lilly BioVentures was created after Lilly employees saw the success of many of the Lilly equity investments in small biotech firms and recognized the need these start-ups had for “organizational memory, discipline, and deep commercial understanding resident in large, mature pharmaceutical companies.” This initiative was a great way for Lilly to stay relevant in the market with access to innovations that it might have otherwise discovered much later.
The Ventures group took risks, even leading investments in some companies. This was a good strategic move for Eli Lilly...
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