How much do Corporations invest in Startups?

Innovation Leaders invest on average 2-3% of their annual net profit into startups. There are numerous benefits in doing so.

According to recent research by BV4, the level of Corporate investment in startups is depending on the industry.

Main findings are:

Innovation leaders invest 2-3% of their annual net profit into Venture Capital. Highly disrupted industries such as media, banking, insurance, ICT are investing most, followed by innovative industries like Pharma and Engineering. Some industries don’t see startup investment as necessary.

Key reasons for investing in startups are:

• Drive growth and profitability through new offerings, gain a competitive advantage
• Financial return: average IRR of 13.96%** over a 5 year period
• Participate in future trends
• Disrupt the own business model, before somebody else does
• Foster a disruptive, innovative mindset, learn from startups
  

There are different forms of investing into startups:

• own VC fund
• selected individual direct or indirect investments
• investing through a professional external fund manager

The study covers a variety of industries on a global scale and it looks at companies of varying size.

**Source: PitchBook Benchmarks, Pitchbook.com