Corporates Investing Together

One of a start-up's five corporate investors changed its chief executive, then its strategy, and lost interest in what the company does. As one of five, its founder said, that was fine. Had it been the only strategic investor, it would have killed the business. The story came near the end of Guy Yavin and Johannes Fors Källström's Ripple on corporates investing together, and it made the case the session had been building from the start. A start-up can be safer with several corporate investors than with one, even when some of them are rivals.

The first founder to speak had eight corporate venture arms on the cap table. The term sheet took nine months to negotiate. A few of the investors compete with one another, which worried the founder at first. In the boardroom the rivalry turned out to push them all to move a little faster. The oil and gas majors among them read a competitor's presence as validation, because the start-up works in a growth area outside their core that they find daunting, and because groups that compete in one market often co-operate in another.

A rival's presence also creates FOMO, one of the hosts said, and a shared board lets competitors discuss things their organisations would not otherwise talk about. Johannes said tolerance depends on the industry. Automotive groups already work with competitors in joint ventures, so Scania is not picky.

Another investor described the opposite risk. A start-up backed by a single strategic can look like that corporate's pet project, and other partners stay away. Two of the fund's mining-technology companies are each backed by two major miners, which neutralises the effect, since a company can work with one on gold and the other on copper. When both want the first pilot, the investor said, the bids get better, because both know the company can only do one thing at a time.

If we have a corporate VC in the board meeting and you don't like that person, don't worry, it'll be someone different in a year or two.

How it goes wrong

Guy said boards break when two corporates want the company's one demo plant, or when one wants a demo and the other pushes for more development. Board members who rotate, suspicion that the company shares more with one rival than the other, and directors who act for the parent instead of the start-up do the same damage.

Turnover came up repeatedly. An early-stage climate investor had found corporates hard going as pure co-investors because a new manager often cuts non-core activities, and venture tends to be one of them. As one of the fund's partners jokes, "If we have a corporate VC in the board meeting and you don't like that person, don't worry, it'll be someone different in a year or two." A founder building electric aircraft knew of worse, a US start-up whose corporate investor took all the IP and shut the company down.

Timing matters too. One of the hosts described a proof of concept that a portfolio company had pushed for after a seed investment. The technology was too early, and when the corporate said it would not take it further, the signal damaged the company. A VC whose capital comes mostly from corporates almost always advises founders against corporate money at pre-seed, and usually at seed, unless there is a clear case.

Follow the incentives

That investor's rule for everything else was simple. "Show me the incentives, I'll show you the outcomes," they said. Some corporate venture arms have a target for the number of pilots they run each year, and others must deploy a set sum. Both shape how they treat a start-up.

Guy said Doral set up its venture arm as a fund in late 2020, when most corporates invested from the balance sheet. A fund commits the group for a long period that internal changes cannot easily touch, and lets the team pay as well as financial VCs. Doral never signs strategic side agreements with start-ups and never promises that the parent will become a customer or a supplier. Guy's tests for a useful corporate investor are real access to the business units, no threat to the parent's core product, and freedom for the start-up to pivot later.

A founder making low-cost ammonia said every corporate investor in the company arrived through a business unit that wanted the technology, and the corporates' deep technical diligence reassured the financial VCs. On pilots, the founder said, corporates all want to be the third, fourth or fifth, never the first. Offering whoever goes first the first pick of the second can create some urgency.

The aircraft founder wanted more than pilots, hoping to learn from automotive how to build in volume. A corporate investor from the automotive sector said such operational secrets are shared only with subsidiaries or with companies in which the group takes a major stake, which is not always what founders want. A proof of concept or a customer contract is far easier to give. Unless a founder will give up a large stake, the corporate investor brings validation and pilots, and the know-how stays inside the group.

This Ripple was hosted by Guy Yavin (Doral Energy Tech Ventures) and Johannes Fors Källström (Scania) at The Drop 2026 on 16 September.