3 min read  Working with a corporate venture capitalist can be a great way for startups to gain traction. If you have begun working with a VC or are considering beginning an investment relationship with one, read the following tips below to ensure you get the most out of your business deal. In working with corporate VCs, follow these best practices: Corporate venture capital is an existing business utilizing venture funding to further the company’s strategic objectives. The firm takes an equity stake in startups either through an internal fund or off the corporate balance sheet. Unlike traditional venture capital, corporate VCs look to gain a competitive advantage for the company and not a financial return. These initial investments often lead to a buyout of the startup. The investment is a useful tool for diligencing a startup and influencing its direction. There are some corporate VCs investing for a return on investment rather than strategic initiatives, but this is rare. Most corporate VCs make investments with the goal of winning more business for their current product and services. It’s a useful method for exploring new markets without committing substantial resources from the corporation. Pros and Cons of Working with VCs Consider access to the R&D departments of the corporate VC and how much value that will add to your startup. Document your work and innovation in great detail as corporate VCs will want to understand the technology and the ecosystem in greater detail than traditional VCs. Proactively educate the corporate VC on your technology and what value it can bring. Adjust the amount of funding you take from the corporate VC so as to control the amount of influence they have over the startup. Understand the timeframe of the corporate VC engagement. In many cases, it’s much longer than the traditional VC. Know your exit strategy and what comes after the relationship with the corporate VC ends or reaches a steady state. Leverage the relationship with the corporate VC for partnerships. Utilize the brand of the corporate VC to help gain access to customers.  Expand your domain knowledge through the resources of the corporate VC such as attending conferences, collaborating on white papers, and working on research projects. Use the corporate VC funding to gain access to additional funding outside the corporate world. Mistakes Companies Make with VCs Avoid the following mistakes when setting up the VC arm of your company: Don’t treat the corporate VC arm as purely an acquisition pipeline. There are several other ways to gain value from a corporate VC structure than just recruiting target acquisitions. Don’t entirely avoid taking risks in selecting startups to pursue. The startup world has a higher level of risk involved than what most large companies find normal. Avoid refusing to accept the fact that there will be failures and avoid planning for it. Most companies want to succeed at everything. In the startup world, there is a high failure rate and there must be a program to manage those failures. Don’t neglect to give the startups enough time to develop and mature. Startups can take several years to develop a meaningful product. Most VC funds are set up for a ten-year cycle. Make sure your company is committed to at least that time frame for running a corporate VC program. Be careful not to treat the corporate VC arm as a business development unit. The VC arm should be working on next-generation technologies and not just the current generation. Don’t require a majority stake as it can be difficult to negotiate and support. Minority stakes are a better fit as it brings other investors into the process. Avoid lowballing the budget. True innovation is not cheap or easy. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/corporate-venturing-2/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

3 min read Deciding whether your company should work with a corporate VC is a big decision and not one to be taken lightly. As with any business decision, you need to do your due diligence. Start by gaining an understanding of what exactly corporate venture capital is, the pros and cons of working with a VC, and industry best practices below. What is Corporate Venture Capital? Corporate venture capital is an existing business utilizing venture funding to further the company’s strategic objectives. The firm takes an equity stake in startups either through an internal fund or off the corporate balance sheet. Unlike traditional venture capital, corporate VCs look to gain a competitive advantage for the company and not a financial return. These initial investments often lead to a buyout of the startup. The investment is a useful tool for diligencing a startup and influencing its direction. There are some corporate VCs investing for a return on investment rather than strategic initiatives, but this is rare. Most corporate VCs make investments with the goal of winning more business for their current product and services. It’s a useful method for exploring new markets without committing substantial resources from the corporation. Pros and Cons of Working with VCs There are both pros and cons to working with Corporate VCs. Pros include: A long-term point of view gives the startup time to grow and develop. Access to partners, customers, and other resources. Domain knowledge can be far beyond what most traditional VCs bring. Funding of major projects is much longer than traditional VCs. Cons include: You must gain commitment all the way to the top of the organization. It can be difficult to build consensus or sell ideas across department lines in corporations. Compared to the startup world, corporations move slowly which can frustrate new ventures. Competition between corporations is widespread. Corporate attention can shift, leaving the startup underfunded. The startup’s innovation will ultimately be pulled into the corporate structure which dilutes the startup’s brand. Best Practices in Working with Corporate VCs In working with corporate VCs, follow these best practices: Consider access to the R&D departments of the corporate VC and how much value that will add to your startup. Document your work and innovation in great detail as corporate VCs will want to understand the technology and ecosystem more than traditional VCs. Proactively educate the corporate VC on your technology and what value it can bring. Adjust the amount of funding you take from the corporate VC so as to control the amount of influence they have over the startup. Understand the timeframe of the corporate VC engagement. In many cases, it’s much longer than the traditional VC. Know your exit strategy and what comes after the relationship with the corporate VC ends or reaches a steady state. Leverage the relationship with the corporate VC for partnerships. Utilize the brand of the corporate VC to help gain access to customers.  Expand your domain knowledge through the resources of the corporate VC such as attending conferences, collaborating on white papers, and working on research projects. Use the corporate VC funding to gain access to additional funding outside the corporate world. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/corporate-venturing-2/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

3 min read Sure, we’ve all heard of venture capitalist funding. But what does it really mean? And how does it work? Today’s article gives you the inside scoop on everything you need to know about VC funding. What is Corporate Venture Capital? Corporate venture capital is an existing business utilizing venture funding to further the company’s strategic objectives. The firm takes an equity stake in startups either through an internal fund or off the corporate balance sheet. Unlike traditional venture capital, corporate VCs look to gain a competitive advantage for the company and not a financial return. The firm seeks to grow its business and uses investment in a startup to gain knowledge of an emerging market, identify key players in the industry, and potentially use the results to grow sales. These initial investments often lead to a buyout of the startup. The investment is a useful tool for diligencing a startup and influencing its direction. There are some corporate VCs investing for a return on investment rather than strategic initiatives, but this is rare. Most corporate VCs make investments with the goal of winning more business for their current product and services. It’s a useful method for exploring new markets without committing substantial resources from the corporation. Types of Corporate VC Funding Corporate VC funding continues to grow as companies look for innovation and startups look for funding opportunities. There are several types of corporate VC funds. Listed below are three common types: Traditional Investment Fund This fund looks and acts like a traditional VC fund. A fund is set up for the program, and investors source and diligence deals similarly to a traditional VC fund. Investments are made for financial reasons and can provide primarily management support. Strategic Investment Fund Investments are made from the balance sheet and for strategic purposes. Investors don’t look for a financial return but rather collaborations. The team is small but works full time on the fund. Investments are not only financial resources but also strategic ones such as partnerships and sales channel access. Opportunity Investment Fund Investments are made off the balance sheet and solely for specific projects. The team is not full-time and consists of members from various departments. Investors are typically product-focused and seek the investment to fill a product need. Investors provide limited strategic and financial support.  How a Corporate VC Works Corporate venture capital is an existing business utilizing venture funding to further the company’s strategic objectives. The firm takes an equity stake in startups either through an internal fund or off the corporate balance sheet. Unlike traditional venture capital, corporate VCs look to gain a competitive advantage for the company and not a financial return. The firm seeks to grow its business and uses investment in a startup to gain knowledge of an emerging market, identify key players in the industry, and potentially use the results to grow sales. These initial investments often lead to a buyout of the startup. The investment is a useful tool for diligencing a startup and influencing its direction. There are some corporate VCs investing for a return on investment rather than strategic initiatives, but this is rare. Most corporate VCs make investments with the goal of winning more business for their current product and services. It’s a useful method for exploring new markets without committing substantial resources from the corporation. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/corporate-venturing-2/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

2 min read Running a Corporate VC: Best Practices If you have recently launched a corporate VC or are considering setting one up, consider the following advice and best practices. How to Achieve Success Running a VC Corporate VCs can leverage their position in the industry to sign up good startups with an investment. The corporate VC brings a network of partners, distribution channels, a brand, an existing product line, and more. An investment can leverage their research dollars and achieve more than if they build it themselves. The pharmaceutical industry recognized this advantage years ago and now primarily invests in funding successful biotech startups rather than doing all the research and development themselves. This model works well where R&D is expensive and there are many potential avenues to take. There is a cost associated with setting up a corporate VC arm, but this investment can be spread across many startups. If used extensively, it can become a core competence for the company. To be successful at this, start with a clearly defined set of goals. Gain commitment from the corporation. Align the compensation of the corporate team to that of the performance of the investment. Those companies whose growth has stalled for some time may be more open to committing to it. Those facing a new wave of technologies may find this a better way to engage. Tools for Running a Corporate VC Program There are several tools for the corporate VC to use in a venturing program. Here’s a list to consider: Hackathon: Invite those in the industry or area to participate in a coding challenge to solve a particular problem. Shared resources: Provide the community with a set of tools and data sets and invite open community collaboration. Challenge prize: Offer a cash prize for the winner of a competition. Corporate venture capital: Offer investments into startups that meet specific criteria. Commercial incubators: Set up a partnership with incubators to provide support in exchange for access to deal flow. Internal incubators: Set up an internal incubator and invite employees and partners to participate. Strategic partnership: Set up partner programs with accelerators, venture capitalists, and other groups to provide deal flow. M&A program: Set up a program for acquiring companies and onboarding into the corporation. Consider augmenting your corporate venture fund with these tools and activities. How to Make the Corporate VC Fund Model Work While traditional venture funds increase their fund size over time, corporate VCs should keep their fund size low. Traditional VCs seek higher compensation and can do so by increasing the size of the fund which increases their management fee. Corporate VCs are often compensated as company employees with some upside on successful outcomes that are not necessarily financial exits. Collaboration, partnerships, and pilots are the most often used metrics for funded companies in a corporate VC fund. Therefore, it is important to keep the costs low, especially at the start, and then grow them over time as you prove the program. It will be easier to provide a positive return on investment for a $25M fund rather than a $200M fund. This will reduce the dollar investment into each startup but there again, it’s best to start small and increase the investment per company over time. A large fund may also draw criticism from other departments in the corporation who want that budget for their purposes. A large fund can create a culture of “contracted labor” rather than a culture of collaboration. The final outcome is not a financial return, but successful collaborations and pilots. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/corporate-venturing-2/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group