Corporate Venturing

Corporate venturing, the spinning out or starting up of new businesses from established corporate entities, can be a key driver of innovation. During recessionary times in particular, it also offers a way for companies to reinvigorate their business, achieve strategic objectives and drive organic growth, whilst benefiting from attractive tax breaks potentially available to companies making venture capital investments. On the back of hopes that such innovation can spearhead the recovery of UK plc, it appears that a resurgence in corporate venturing is imminent: now is a good time for companies to be asking if their organisation is suitably geared up for venturing opportunities.

Lawyers David Mardle, Simon Walker

There is a range of structures available to companies, depending on the objectives and strategic thinking behind each venture. The key models are:

• VC-like investment, where large companies have a venture capital arm dedicated to investing stakes in smaller companies, otherwise unconnected to the investor company
• joint venture – a corporate or contractual collaboration between trading companies, or
• corporate spin-outs that enable large companies to extract value from non-core intellectual property assets that are discovered or developed as a by-product of that company's core activities. This is done by spinning out the technology into a new company.

The pros and cons of each model must be evaluated on a case-by-case basis, but where the correct tactic is employed, venturing can achieve certain corporate objectives for the organisation in a much more effective manner than the blunter instruments of acquisition and disposal, merger and demerger.

For more information please contact David Mardle or Simon Walker