The trend of corporate money flooding the startup zone will take time to settle down
The Global Enterprise capital market did not reach its peak in 2021 in a year. It will also take a lot of time to relax from last year’s excesses.
That fact is evident from new corporate venture capital (CVC) data collected by business intelligence group CB Insights. According to the companies latest report on the subjectCVC activity was strong in the first quarter, albeit with some vulnerabilities that we suspect developed as the first quarter turned into the last month.
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Given the recent trends we’ve seen in the larger venture capital market, it seems unlikely that CVC will change course and bounce back to records; more declines seem a reasonable expectation.
It’s no surprise that CVC is pulling out as venture capital in general slows. CVC numbers were part of the company’s rise, and since they’ve been pegged on the way up, it’s hardly mind-boggling to see them fall at the same time.
The somewhat modest declines in CVC that we will soon observe are important for reasons other than just tracking the available investment flow for startups. Recall that businesstraverse.com has explored the concept of historically high levels of CVC investment that could potentially turn into remarkable M&A volume for startups this year. The fact that corporate venture capital did not decline rapidly in the first quarter of 2022 lends additional weight to the concept, as there are now even more potential investment deals that can be turned into acquisitions during the year.
Let’s take a look at the changing pace of CVC activity and then narrow our focus to geographic trends to see where it’s warmer and cooler. (Hint: Europe and China are outliers, in opposite directions.) We close with a summary of the M&A argument and talk about which CVC is most exposed to changing business conditions.