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Quarterly Report – Oct 2023

The State of Venture and CVCs: Taking stock of the past 18 months

“The State of Venture and CVCs: Taking stock of the past 18 months,” a collaborative research report conducted by TDK Ventures and 6Pages, explores the behavior and performance of corporate venture capital (CVC) in contrast to traditional venture capital (VC) over the challenging past 18 months.

Key Report Findings:
In a climate of limited capital availability, active CVCs play a pivotal role in stabilizing a venture market in turmoil.

  • Macroeconomic Impact on VC Landscape: The report emphasizes the influence of recent macroeconomic factors, notably rising inflation and interest rates, on the VC landscape. Investors have shifted from the “fear of missing out” (FOMO) to the “fear of making mistakes” (FOFU), adopting a more cautious approach. This shift has resulted in a substantial decline in VC investment, with global deal values plummeting by 46% year-over-year as of August 2023. High-growth startup valuations have also decreased, and some have faced challenges in raising funds.

  • CVC Resilience in Low Capital Availability: In a climate of limited capital availability, active CVCs have played a pivotal role in stabilizing a venture market in turmoil.

  • Divergence in VC and CVC Behavior: While VC firms have encountered difficulties and struggled to secure funding in 2023, CVCs have remained relatively active, participating in a substantial proportion of venture deals, albeit with reduced deal sizes.

  • CVC Participation and Resilience: In 2022, the proportion of US VC deals featuring CVC participation remained consistently high at around 26%, even as other nontraditional investors decreased their involvement. Moreover, as of Q2 2023, CVCs continued to be involved in a substantial portion of US VC deals (24.4%) and accounted for an even larger share (64%) of deal value in H1 2023.

Weathering the Storm

The report underscores the resilience and continued prominence of CVCs in the venture landscape despite challenging economic conditions. This suggests that CVCs may be better positioned to withstand economic fluctuations due to their funding sources from corporate parents.

The research aims to provide value to entrepreneurs during challenging times. Future reports from TDK Ventures and 6Pages will delve into topics such as diligence and high-quality decision-making, strategies for entrepreneurs to extract more value from their relationships with CVC investors, and insights on how CVCs should be organized.

Slide with title 'State of Venture and CVCs'.

For further insights and details, please download the complete report.

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TDK Ventures is the corporate venture arm of TDK, investing globally in early-stage hard-tech projects. Our mission is to serve entrepreneurs and add strategic value to startups as they work to build a better tomorrow.

6Pages is a market intelligence service for far-reaching market shifts in business and technology. Their deep, clear briefs help senior executives, investors, and strategists get up to speed and make better, faster decisions. Learn more at 6Pages.com.

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