It is challenging to stay competitive amid rapid change driven by disruptive technologies, economic fluctuations, shifting customer demands, new market entrants, and political or regulatory uncertainties.
Yet, uncertainty often breeds opportunity, and companies that position themselves strategically can thrive in unpredictability. One of the most effective strategies for beating uncertainty is corporate venturing.
Here are the ways organisations can leverage corporate venturing to stay competitive in an uncertain world:
Taking Advantage of Disruptive Technologies
In the age of rapidly evolving technology, companies that fail to adapt risk becoming obsolete. Corporate venturing allows companies to invest in startups pioneering disruptive technologies, ensuring they stay at the forefront of innovation.
One example of this strategy is energy company Equinor’s venture capital arm Equinor Ventures, which invests in climate-focused companies such as clean energy procurement startup Powertrust.
Diversifying Revenue Streams
Economic uncertainties, such as inflation, recession, and reduced stock prices, can negatively impact business operations. Corporate venturing helps companies diversify revenue streams to counteract such uncertainties.
For example, Alphabet’s early-stage investment group, formerly known as Google Ventures, invested $258 million in Uber in 2013. Six years later, Alphabet’s stake was worth over $5 billion.
Meeting Evolving Customer Needs
Changing customer preferences driven by factors like technological advancements and social shifts require rapid adaptation. Corporate venturing allows companies to pivot and meet evolving needs in a low-cost, low-risk manner.
One VC firm that successfully invests in technology is Andreessen Horowitz. For example, it provided strategic support to Airbnb, enabling the company to adapt and thrive by embracing mobile booking in response to evolving customer preferences.
Partnering with New Market Entrants
The entry of new players into established markets poses a threat to existing businesses. Corporate venturing enables companies to partner with these newcomers to access new revenue sources, technologies, and business models.
For example, Intel Capital, the venture capital arm of Intel Corporation, which produces automotive engine controllers, made a strategic investment in Mobileye, a company specialising in advanced driver-assistance systems and autonomous driving technology.
Reducing Political or Regulatory Risks
Political or regulatory changes can disrupt business operations and pose legal and financial risks. Corporate venturing allows companies to spread risk across various ventures, reducing their exposure to shifts in government policies.
An example of this strategy is Salesforce Ventures, the venture capital arm of Salesforce. By investing in a variety of cloud-based and enterprise software companies, Salesforce diversifies its portfolio, reducing its vulnerability to regulatory shifts.
In conclusion, corporate venturing is a powerful strategy to navigate the uncertainties of today’s business world. It allows companies to take advantage of disruptive technologies, diversify revenue streams, meet evolving consumer needs, and reduce political or regulatory risks. By strategically investing in or partnering with startups, companies can future-proof their businesses and thrive in an unpredictable landscape.
