90% of Corporate Venture Capital invests at Series A

Mountside Ventures, an accelerator and early-stage advisory firm in Europe, has unveiled its 2024 'Navigating Corporate Venture Capital' report, produced in collaboration with Love Ventures, an early-stage venture capital firm specialising in FinTech, Future of Work, and ConsumerTech.

This annual report, developed with contributions from Sheridans, Dealroom, and FieldHouse Associates, offers insights from over 100 global corporate venture capital (CVC) investors managing assets exceeding £20 billion, deployed across more than 1,200 startups and venture capital firms.

Since 2010, CVC participation in deals has surged, rising from 10% to 25% in 2024. The report highlights that CVCs are increasingly investing in startups to leverage cutting-edge technologies and stay abreast of market trends, maintaining their leadership in global innovation. Founders are inclined to seek capital from CVCs over traditional VCs for access to strategic resources such as specialised R&D capabilities, long-term partnerships, exit opportunities, and market validation.

The tech sector remains a primary focus for CVC investments, with 90% of investors planning to maintain or increase their early-stage investments over the next three years. Reflecting the global surge in AI funding, the report indicates that approximately 40% of CVCs are investing in B2B companies focused on AI and machine learning. While 90% of respondents invest at the Series A stage, 65% intend to continue at this stage, and 18% are looking to invest earlier, countering the expectation that CVCs predominantly back later-stage ventures.

A notable trend is the direct investment of CVCs into VC funds, with one in three CVCs engaging in this practice. The report reveals that 83% invest in VC funds for enhanced market intelligence, 64% for financial returns, and 61% for improved deal flow for later-stage investments. This strategy not only aids funds in capital raising but also benefits their portfolio companies through follow-on funding potential and strategic partnerships.

Jonathan Hollis, Managing Partner at Mountside Ventures says: “The CVC market is maturing and we’ve seen that over the last few years with the growing number of deals made by large corporates. By combining results from surveying over 100 CVCs actively investing in founders and funds, as well as analysing data on CVC investments over the last 15 years in Europe, we hope this report acts as a playbook for founders and investors alike.”

Adrian Love, General Partner at Love Ventures says: “We think a lot about how we can create the ideal conditions for early-stage startups to thrive and have a growing testbed of what does and doesn’t work well for venture-backed companies. One of the areas we’ve been heavily focussed on is the merits and drawbacks of startups bringing corporates onto their cap tables at the early stage. We are determined to work with this growing pool of capital as we continue to build meaningful relationships with the leading CVCs across Europe and the US who have the potential to turbocharge the growth of our portfolio and others in the tech community.”