Creating a Distinctive Brand as a CVC: How to Stand Out in a Crowded Space
This post provides examples of how various corporate venture capital (CVC) funds have built brands dependent on investment strategy and strengths.
Samantha Huang, Principal at BMW i Ventures, has been a core member of the Counter Club Advisory Board, helping other CVC funds with branding and positioning. This post is authored by Samantha, with participation from Counterpart Ventures.
In recent years, Corporate Venture Capital (CVC) investing has become a core pillar within the startup and venture ecosystem. Today over 70% of the Fortune 100 have a CVC initiative, up from just 10% in 2000. In 2022, CVCs participated in roughly 30% of all Venture backed deals. Both statistics are taken from Counterpart Ventures and SVB’s 2022 State of CVC Report, in which 164 CVCs from around the world were surveyed. In this increasingly crowded venture market, CVCs need to establish a strong brand to differentiate themselves from traditional venture capitalists and other CVCs. Building a brand that accurately reflects the CVC’s investment strategy and strengths is critical for getting into competitive deals and ensuring sustained long-term success. Accordingly, in this post, I discuss the importance of branding for CVCs and how CVCs can effectively market themselves. The hope is that through this post, CVCs can understand the importance of and gain a better understanding of how to build a strong brand to compete in that ongoing venture quest for the best deals.
What is a Brand?
First, let’s start with a simple explanation of what exactly is a brand. The term brand refers to the set of feelings, expectations, and relationships that a person may attribute to your CVC group. In developing a brand, you must take into account and standardize all the different ways your brand is communicated — whether across marketing materials like the website and logo or your verbal communications to other founders and investors. The total impact of these materials must be consistent with the brand experience you are trying to convey to the market.
For many of us CVCs, our brands are inextricably linked to the brand of our corporate mothership. This can be both a blessing and a curse. The “halo effect” of the corporate mothership’s brand can be a powerful tool for enabling CVCs to get access to deals. This is because founders are more likely to know a corporate brand like Google or BMW over the name of a random VC firm, and, if they get your CVC’s name on their cap table, it’s a great market signal for validating whatever they may be building. However, the curse of the “halo effect” of a corporate brand is that in the fast-paced game of startup investing, the brand of the corporate mothership might not necessarily convey that awe-inspiring feeling of innovation. A corporate brand might also pigeonhole a CVC into only doing certain investments in the areas that the corporate mothership is known for, even though the CVC seeks to invest into new exploratory market verticals that the mothership does not touch. There’s a reason why, for example, Google Ventures can likely get into any enterprise SaaS deal but might struggle to get into a deal in the mining industry.
Developing a Brand as a CVC
When creating a brand, CVCs should take into consideration four core questions, as I outline below. Such is critical to developing an effective brand that is well-recognized within the venture ecosystem.
1. Who is the Target Audience?
CVCs must consider their target audience in developing a brand. The target audience for CVCs is broadly the range of entrepreneurs, VCs, and other corporate players — the stakeholders through which CVCs gain access to deals. Importantly, CVCs must also take into consideration their corporate sponsor/mothership in developing its brand. After all, such CVCs only exist to the extent they are enabled by their corporate sponsor, and keeping such a corporate sponsor happy and respected is necessary for the long-term viability of any CVC. In summary, you should craft your brand based on the dual interests of 1) catering to the palates of founders, VCs, and other corporates to get access to the best deals; and 2) keeping your corporate sponsor engaged and supportive of your CVC efforts.
2. How Does the Investment Strategy Influence the Brand?
For CVCs, investment strategy also plays a significant role in branding. Strategic CVCs focus on investing in companies that can provide value to their corporate sponsor while financial CVCs prioritize financial returns.
If you are more of a strategic CVC, your brand should be tied closely to your corporate mothership. Your brand should convey how you are an enabler of value provided by your corporate connections. Bosch Ventures and Maersk Growth are both more strategically oriented funds, for example, and the retention of the names of their corporate parents serve to entrench that notion. (For more on this topic, check out Counterpart’s last post, Building a CVC Operating Model to Deliver Strategic Value: Maersk Growth).
If you are moving toward the direction of a financial CVC, your aim should be to create a brand identity that is further distinct from your corporate parent while still leveraging the halo effect of your corporate parent. Your goal in your branding and communications is to show you are financially savvy investors who can provide special value enabled by your corporate mothership. Your narrative should hinge on your ability to provide capital and strategic value to differentiate yourself from institutional firms. If you’re a new financial CVC, your branding should stay close to the corporate identity of the parent until you become more fully established and more recognized as a financially oriented concern. A good example of this evolution in brand was the rebranding of SAP Ventures to Sapphire Ventures, which today is considered one of the top growth equity firms.
3. How Does the Brand of the Corporate Parent Influence Your CVC Brand?
It is important to emphasize that your brand as a CVC should be tied to your corporate identity. The brand of Shell Ventures, for example, is intended to convey the general move of the corporate parent away from pure fossil fuels into a greener, more sustainable future. That is the reason why when you get to the landing page of the Shell Ventures website, you see a picture of solar panels amid a backdrop of lush trees, as opposed to less inspiring pictures of oil refineries. Never forget: your strength as a CVC rests in leveraging the “halo effect” of the corporate parent, so your brand should generally never stray too far away from the brand of the mothership.
4. What is the Purpose of your brand? What are you Trying to Achieve?
CVCs can use their brand to dictate the direction of a conversation with a founder, before even entering the room. If you fail to articulate your brand as a CVC, founders may have an incorrect understanding of what your CVC does. Let’s take a newer CVC, BTomorrow Ventures, launched in 2020 and the CVC arm of British American Tobacco. These days the tobacco industry isn’t what it used to be — we can all agree on that! If a founder gets approached by BTomorrow Ventures and decides to check out their website, it isn’t immediately clear who the corporate parent company is. On the website landing page, you will find the text “We’re BTomorrow Ventures (BTV), the corporate venture capital arm of BAT” in small font. The use of the acronym, rather than the full name, keeps the origins of the fund vague. BTomorrow Ventures seems to intentionally distance itself from its corporate parent, which determines the sectors they invest in: advanced sciences, ESG, climate, sustainable consumer brands and more. Clever branding has a purpose. In the case of BTomorrow Ventures, the fund conveys the mandate and strategy of the CVC arm: to invest in technologies that will impact the future of the corporate sponsor’s business.
It is worth mentioning some examples of clever branding by CVC funds over the years. One example is from Nagraj Kashyap, who formerly was the Head of M12 (f.k.a Microsoft Ventures). Prior to Nagraj taking over at M12, he ran the very successful Qualcomm Ventures. One of the first moves Nagraj made to distance the fund from its prior history was to rebrand the CVC fund from “Microsoft Ventures” to “M12”. It’s a simple name change, but one that is very powerful and meaningful. Taking over a CVC that had been operational for years before means adopting its existing portfolio and all the associated baggage. Nagraj’s move to rebrand was intended to signal that the fund had a fresh start or new life. The new name gave the fund the independence it desired whilst also retaining access to Microsoft resources. Additionally, their team received new email domains (@m12.vc), which again distanced them from the parent corporation even while the team still worked out of the Microsoft office in San Francisco. The new logo gave a fresh start too and the shortened name gave them relatability to the likes of top decile funds such as “a16z” or a “GV”. It was a savvy move.
Another example where creative branding has given the CVC fund a new start is Siemens’ Next47. The name Next47 indicates the year in which Siemens was founded (1847). Their 2016 press release talks about categories they are investing in and how they have been active with startups since the late 1990s. Brilliant naming can provide tremendous value to the CVC fund and it is often overlooked by CVCs including those recently launched.
Once you conduct the exercise of fine-tuning your brand, you must now do the hard work of conveying your brand through your various marketing and communications initiatives. As a CVC, you must be able to convey your brand across the “hard materials,” which include the physical and visual materials to market your activities. This includes everything from your website, your logo, your corporate swag, etc. You must also be able to effectively communicate your brand through the “soft materials,” which includes the ways in which you verbally communicate your brand during your various meetings with other ecosystem stakeholders. Both are essential in your marketing initiatives to differentiate yourself as a CVC.
Branding is critical for all CVCs to distinguish themselves in a crowded market. CVCs must create a brand that plays to their strengths and weaknesses as a CVC, which depends largely on their investment strategy. Strategic CVCs should closely align with their corporate parent, while financial CVCs should differentiate themselves from their mothership while still retaining the benefits of association with their mothership. By executing their brand across various channels and interactions, CVCs can effectively market themselves, gain access to the best deals, and achieve their objectives.