Corporate Venturing

A larger company takes an equity stake in a smaller company. The larger firm acts as traditional venture capital firm by setting up a fund to invest in startup and growth companies.

Another method is when a firm makes an indirect investment in going through a traditional venture capital fund or trust. The larger firm hopes to make a return on its investment when the company is sold or floats on a stock exchange.

Finally, through a strategic alliance with a smaller company, a larger firm helps the smaller firm develop products or services that will generate income or cost savings for both parties.