Solidified abroad, the corporate venture capital (CVC) model is maturing in Brazil. After the peak recorded in 2021 and 2022, the sector entered a cycle of contraction, in line with the movement observed in traditional venture capital. The recovery, however, depends on a better alignment of expectations between corporations, funds and startups.
For Leonardo Monte, president of Brazilian Corporate Venture Capital Association (ABCVC)it is important that all these agents keep in mind the objective of the program. Most of the time, these initiatives exist to help solve corporate challenges and accelerate innovation, not to generate financial returns.
“CVC in Brazil is very recent and there is still a lot of pressure for short-term results, when, in practice, this is a long-term strategy, which requires time, patience and internal transformation in companies”, he states.
He cites as an example a confusion still common in the Brazilian market regarding the place occupied by corporations in the governance of startups. “There is a confusion that we have been trying to combat: CVC is not M&A. If the company wants to buy, it does M&A. CVC is another logic”, he states. In this model, according to Leo, the best option is for the corporation to build minority stakes over time, monitor the startup’s development and, only if it makes strategic sense, evolve into an acquisition in the future.
Liliam Carrete, Finance professor at FIA/USPadds that the company’s minority stake in the startup is important to ensure that this company has the freedom to innovate and accelerate. Which, after all, is the point of investing.
“This is fundamental, because the corporation will be able to derive the strategic value from this investment, but it will not direct the startup exclusively in its interests”, he highlights.
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Leo also adds that one of the main factors in the failure of corporate programs in Brazil is not the lack of financial return, but the absence of governance and strategic clarity. “It’s not enough to say that it carries out open innovation, acceleration or investment. It is necessary to define what the company wants, what problems it intends to solve and how the startup will connect with the operation”, he says.
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According to him, many companies also underestimate the complexity of operating risky investments. Therefore, partnerships with specialized managers or the formation of capable internal teams are natural ways to structure more robust programs.
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On the startups side, Lilian believes that there is also educational work to be done. One of the problems, for the professor, is the lack of entrepreneurship subjects at universities.
“Startups generally approach investors with a rope around their neck. If they don’t get investment in two months, they won’t survive. We have a lot to evolve. Startups need to be sophisticated enough to decide whether it makes sense to receive investments from CVC, VC or both at the same time. This co-investment can be very healthy”, he points out.
For the professor, it is important that startups also learn to differentiate the roles of each type of investor. Receiving a CVC investment can mean direct access to customers, product validation, testing in a real environment and strategic support. “Especially for B2B startups, this can be decisive,” says Liliam.
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In this context, the ABCVC ea FIA/USP are structuring a partnership aimed at training executives and promoting research on the Brazilian CVC market. The proposal is to offer an executive program that simulates, in practice, the experience of structuring and operating a corporate venture capital arm — from defining the thesis to creating value and exiting the investment.
“The idea is to help companies that are starting out or that already operate CVC to understand best practices and make more qualified decisions”, says Lilian. According to Leo, the initiative also includes the development of studies and reports with greater neutrality and depth on the sector. “The market needs reliable data to evolve. Our role is to help create this environment of trust and learning”, he concludes.
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