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Corporate Venture Capital is a model of collaboration with entrepreneurs and startups within the open innovation strategy of corporations with a sole objective: to promote innovation in the company and participate in the development of new technologies or business models.
One of the tools it has is financial investment, usually used by corporates to financially support startups or companies with great growth potential that are in the early stage.
Companies that already have their M.V.P. (minimum viable product) in the market and their launching customers or users, but they find that they must initiate a continuous process of improvement and scalability, which requires resources and knowledge they do not yet have.
Once the methods of financing known as FFF (friends, family & fools) and seed capital, which can serve in the early stages of entrepreneurship, have been exhausted, Early Stage startups can now turn to Corporate Venture Capital (CVC) to support their growth.
Corporate Venture Capital’s main aim is to promote innovation in the company and participate in the development of new technologies or business models
In exchange for taking on the risk of investing in a project still under development and without effective validation, the corporate could become a shareholder of the startups, usually obtaining a stake that usually ranges from 5 to 30%, depending on its investment thesis and its corporate goals.
In addition, it could obtain voting rights and sometimes a board seat or an observer seat on the board of directors to guide the new business in the right direction and maximise synergies with the corporate’s objectives.
This type of support, although in some way it implies a transfer of control of the company to the entrepreneurial partners, can be essential in helping startups achieve their goals, both technically and in terms of business development. Especially in technologies in sectors as complex as the energy sector, which has slower and more capital-intensive developments than other more digital areas, and in which access to beta-testers is very complex.
To achieve these launching customers, the CVCs are a key support, since in addition to the capital itself, they could play this validating role.
The backing of a Corporate Venture Capital, in addition to representing a commitment to investment and the entry of funds for the startup in question, allows the investee companies to have easier access to public funding programmes that help them to scale up. This funding is essential in a sector such as the energy sector, which requires a lot of funds to carry out technical developments. They also favour direct connection with industry and provide access to strategic markets that would otherwise be far more difficult for entrepreneurs to reach.
The backing of a Corporate Venture Capital allows investee companies to have easier access to public funding programmes that help them to scale up
Beyond the financial backing, Corporate Venture Capital specialised in certain industries provides greater advantages for the growth of the companies financed than generalists. Enagás Emprende, Enagás’ open innovation and Corporate Venturing programme for the investment and acceleration of internal projects, external start-ups and innovative technologies in the field of energy transition, is one of the best examples.
It provides its investee companies with various support and investment tools, including Corporate Venture Capital (CVC) through which it takes a share in the companies, provides the means to carry out technological validations at its facilities, the possibility of being a launching customer through an innovative purchasing process or facilitates, commercially speaking, the creation of an industrial network.
The Enagás Emprende team also supports the startups with an acceleration programme tailored to each company, which includes specific training to improve the management and development of technologies or services, mentoring, advice and commercial leads, among others.
Corporate Venture Capital specialised in certain industries provides greater advantages for the growth of the financed companies than generalists
It also provides startups with two spaces located in Madrid: the Enagás Fab and the Energy Venture Center, so that they can develop their businesses and as a springboard to access their next business phase, the Growth Stage.
As a result of the interesting synergies generated by this system, venture capital investment in Spain has multiplied by 3.8 since 2015, reaching a record 1.9 billion euros invested in the first half of 2021, according to the Spanish Tech Ecosystem report. These figures speak of the strength of the national entrepreneurial ecosystem, valued at 46 billion euros in 2021, and which brings together more than 10,500 startups and more than 300 scaleups (innovative companies that are already in the growth phase).
At the same time, all indicators endorse the maturity of the Spanish market to take on local and international investment. Spain has a good funding infrastructure and a thriving number of entrepreneurs in areas ranging from financial technology to health or banking, which are a guarantee of long-term development.
In this context, Corporate Venturing funds are a fundamental agent for the acceleration and growth of startups whose business model revolves around the energy transition and which are developed around renewable gases (green hydrogen and biogas/biomethane), sustainable mobility, energy efficiency, energy storage, CO2 capture and digitalisation in general. Their investment figures, still small in Spain compared to traditional VCs, continue to grow year after year.