Demystifying the world of corporate venture capital investing in insurance
By Sabine VanderLinden
With Corporate VC as a service, large established companies develop, sponsor or invest in startup companies from the earliest stages of formation to later stages of growth. They do this for the purpose of identifying new technologies to develop cutting-edge customer-driven solutions and delivering innovative products and services that can resist the effects of time. In simple terms, the startup company and the corporation will likely be in the same core area e.g., InsurTechs get backed by large insurance giants whereas a pharmaceutical firm concentrates on Life Science and HealthTech ventures. And we know in each case there may also be some overlap.
Corporate venturing as a service has some similarities to what R&D is in many industries. Not much used in insurance, but something that could bode well for larger companies if considered consistently and strategically.
The central point is that a startup company is evaluated and funded by the corporate venture capital arm of the business. This works well to shake off protocol and bureaucracy which can weigh down innovation when a parent company gets involved in these decisions.
Corporate venturing has some similarities also with Venture Capital (VC). As you would expect. There is certainly shared territory here even though some venture capital units do not like so much newbies corporate venture capital units. Venture Capitalists (VCs) are experts at the money side of things where they focus on the financial objectives, whereas the corporate venturing team draws expertise from strategy, finance, and the industry, with their fingers on the pulse of emerging trends, opportunities, and risks. The two can actually benefit each other enormously when working in tandem as we have seen with many emerging corporate funds signing up established corporate players as Limited partners.
Alchemy works upstream as an accelerator as a service and research lab, while Mandalore Partners positions itself downstream as a vc as a service and investment fund.
