A few days ago, PitchBook released a Q1 2025 Analyst Note, entitled: “A Lack of Pathway From US CVC Investments to an Eventual M&A,’ in which it highlighted how ‘Corporate venture capital has been an undisputed force in the US venture ecosystem’ and how in the last ten years, it has ‘has accounted for more than 46% of total VC deal value and 21% of deal count.’ Yet, the analyst note identifies that ‘despite having deployed massive capital, CVCs haven’t converted many of their portfolio companies into acquisitions.’ This is an interesting observation and one that requires some context.

Yes, corporate venture capital (CVC) plays a crucial role in funding innovation, enabling corporate leadership, and driving long-term business growth.

When you consider the innovation that we and businesses use today, venture capital companies, especially American VCs, are often recognised for the risk they took and the financial support they delivered. CVCs are less so, but they are critical and a great potential partner for start-ups and innovators.

When Did Corporate Venturing Start?

The concept of corporate ventures started in the 1960s, '70s, and '80s when companies like General Electric (GE), Xero, IBM, and DuPont launched their own ventures in the 1970s and 1980s, exploring new technologies aligned with their industries. It was during the 2010s, though, that CVCs saw a resurgence, driven by the pace of technological innovation. However, the success of startups like Silicon Valley and the need for large companies to stay competitive in an era of digital transformation led to a rise in CVCs.

Today, CVCs have become a significant force in supporting innovation, with over $100 billion deployed annually across diverse industries, from technology and life sciences to energy and consumer goods. Unlike traditional Venture Capital (VC) firms, which primarily seek financial returns, CVCs invest with both strategic and financial objectives in mind. They help companies tap into disruptive innovations, strengthen their supply chains, and foster ecosystem growth, ensuring that both the startups they back and their parent companies benefit.

Why Strategic Communications is a Game-Changer for CVC Investors

Despite accounting for 46% of total US VC deal value over the past decade, CVCs often struggle to convert investments into acquisitions.

According to PitchBook data, less than 4% of portfolio companies are eventually acquired by their corporate sponsors. This low conversion rate presents a challenge in realising the full potential of investments. This should not be seen as a negative, especially given what companies that receive investment get from CVCs in order to grow and scale.

On average, CVCs adopt medium—to long-term investment horizons, withholding periods averaging 5 to 7 years or longer, depending on strategic goals and market conditions.

One of the most overlooked areas in CVC strategy is strategic communications and stakeholder engagement.

Firms that invest in structured communications, investor relations, and strategic market positioning achieve measurably stronger financial performance, with McKinsey & Company (2020) linking such practices to 20–30% higher shareholder returns over time.

Startups prioritising clear market positioning and investor engagement secure significant valuation premiums; CB Insights (2023) highlights that strategically positioned startups in competitive sectors command valuations 25–35% above industry averages. Furthermore, corporate venture capital (CVC) programs integrating communications and regulatory alignment into their strategies demonstrate outsized success: Boston Consulting Group (2022) found these CVCs achieve double the acquisition success rates and 15–20% higher ROI, while Global Corporate Venturing (2021) attributes a 30–40% reduction in regulatory friction to proactive stakeholder engagement. This data underscores the critical role of strategic narrative and regulatory foresight in driving financial and operational outcomes.

Investing in communications de-risks and adds value to the investment and corporate investing. 

The Challenge: CVCs Are Leaving Value on the Table

Many CVC-backed startups face challenges in maximising their valuation and acquisition potential. One primary reason is high valuation gaps. PitchBook data reveals that CVC-backed startups have 2.5x higher pre-money valuations than traditional VC-backed startups. This creates acquisition barriers, as corporations find it difficult to justify the expense of integrating these high-valued startups.

Additionally, acquisition rates remain low. Many CVC-backed companies opt for IPOs or secondary exits instead of integrating into their parent organisations. This is partly due to a lack of market positioning and weak corporate visibility, which reduces their attractiveness as acquisition targets. Limited stakeholder engagement also plays a role, as weak corporate visibility impacts investor confidence, media interest, and policy engagement.

Given these challenges, strategic communications becomes an essential tool for CVCs looking to optimise returns, secure acquisitions, and strengthen investor engagement.

How Strategic Communications Unlocks Investment Value

One of the most effective ways to improve CVC outcomes is to be proactive in how a CVC positions itself, privately and publicly, through very tactical media relations, investor storytelling, and government engagement activity.

Companies that invest in communications from the early stages strengthen their market positioning, making them more attractive for both acquisitions and follow-on funding.

For example, Salesforce Ventures, the CVC arm of Salesforce, has demonstrated how communications can drive value. By consistently promoting its investments, highlighting its startup partnerships, and positioning itself as a key player in enterprise technology, Salesforce Ventures has successfully positioned its portfolio companies for exits. The CVC unit has facilitated multiple acquisitions, including its purchase of Mulesoft ($6.5B), Tableau ($15.7B), and Slack ($27.7B), each of which benefited from strong market perception and investor confidence before the acquisition.

Similarly, GV (formerly Google Ventures) has built an industry reputation by maintaining thought leadership and actively promoting its portfolio companies. GV’s investments in Verily (life sciences) and Impossible Foods (alternative protein) have been amplified by strategic storytelling, increasing valuations and driving large-scale partnerships.

The Role of CVCs in Driving Innovation and Market Success

CVCs are not just financial backers but strategic enablers of market-changing innovations. Unlike traditional VC firms, CVCs bring industry expertise, corporate networks, and operational insights that significantly impact startup growth trajectories. However, these advantages must be effectively communicated to key stakeholders—including corporate leadership, investors, and government bodies.

Investing in communications, reputation management, and stakeholder engagement ensures that portfolio companies receive the necessary visibility to attract acquisition interest. A structured stakeholder engagement strategy helps companies navigate regulatory landscapes, position themselves within industry conversations, and increase credibility in financial markets.

Key Recommendations for CVC Investors

To maximise investment returns, CVC firms should integrate strategic communications into their core investment approach. 

1. Establish a Strong CVC Brand and Thought Leadership Strategy

Developing a robust and strategic PR and media engagement plan can significantly improve market perception.

Consistently publishing investment insights, funding reports, and thought leadership content ensures that CVC-backed startups gain visibility among investors and potential acquirers.

2. Support Portfolio Companies with Strategic Communications

CVC firms should actively provide startups with branding, messaging, and reputation management resources. This enhances their ability to attract follow-on investment and strengthens acquisition interest from corporate stakeholders.

3. Align CVC Investments with Corporate Storytelling

Many parent companies struggle to see the long-term strategic alignment between their CVC investments and corporate innovation strategies. Positioning investments as part of a broader corporate narrative improves acquisition likelihood and market integration.

4. Strengthen Government & Industry Stakeholder Relationships

Engaging with policymakers, regulators, and industry bodies ensures that CVCs maintain a strong presence in the innovation ecosystem. Proactive engagement can also lead to favourable regulatory conditions, helping portfolio companies scale more effectively.

CVCs Must Invest Beyond Capital

The investment landscape is shifting, and financial capital alone is not enough. CVC investors must recognise that strategic communications, reputation management, and stakeholder engagement are critical levers for maximising return on investment and bringing innovation to market their supply-chain.

CVC firms that proactively invest in communications will see higher acquisition rates, better valuations, and stronger industry influence. Structured communications strategies lead to measurable financial outcomes.

📩 Are you a CVC investor looking to unlock greater value from your investments? Let’s discuss how strategic communications can better position you and transform your investment strategy. Get in touch today!

Please comment, share or subscribe to my  LinkedIn Reputation Matters newsletter. Or connect with me on LinkedIn.