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Established corporations, such as Intel, Amazon, Google, and Johnson & Johnson, have played a pivotal role in startup fundraising in recent decades. Despite the surge in the volume of CVC investors and deals, there is still controversy about whether CVC is an effective toolkit to create value for both investors and startups alike.

There are three widely acknowledged domains of performance outcomes that are affected by CVC investments, the financial performance of corporate investor, strategic performance of corporate investor and venture performance. In this study, we use meta-analysis to synthesize how well CVC investment performs in each of these distinctive performance domains; we further demonstrate the overall pattern regarding how CVC performance outcomes are interdependent across the three distinctive domains.

We worked in three steps to unpack the performance impacts of CVC investments.

First, we decomposed each of the broad domains into more nuanced performance aspects, such as learning in the corporate strategic domain. Applying are source dependence logic, we theorized how CVC affects each performance aspect by resolving a corresponding interdependency or triggering new resource constraints. Second, we explained and tested how the magnitude of CVC performance outcomes systematically differs across these domains. The comparison revealed that in corporate-venture investment relationships, ventures face more difficulty in extracting value as opposed to value capture by corporate investors. Third, we explored the interrelationship among these three broad domains to understand how value is created and captured along the stages of the investment.

The findings highlight the tradeoffs that both sides of the CVC investment should be aware of when stepping into a potential partnership. In deciding whether to engage with a CVC investor, startups need to carefully evaluate the relative importance of the corresponding benefits and costs in its own business setting. Such a thoughtful approach increases the likelihood of a “win-win” outcome.