- CVC is the venture capital arm of a large corporation, investing in startups and more mature businesses that align with the parent company’s interests.
- The goal of CVCs extends beyond financial returns to building strategic, balanced, collaborative and mutually beneficial relationships.
- Sopra Steria Ventures (SSV) is an example of corporate venturing in action, going beyond investing by leveraging a CVC platform to create business synergies between startups with the group.
- SSV invests in early-stage B2B startups, focusing on European tech companies spanning areas like SaaS, AI and VR.
- Additional services SSV offers include bringing open innovation solutions to business units by working directly with startups or through VCs and CVCs’ portfolios of startups.
- When it comes to raising funds for growth, early-stage and startup companies have two main options: corporate venture capital (CVC) or venture capital (VC). Both share several things in common but also have some key differences.
- We explore the topic below, alongside how Sopra Steria entered the CVC arena with Sopra Steria Ventures (SSV), whose mission focuses on “generating startup partnerships for the Group and investing and co-developing strategic offerings”.
Benefits of corporate venture capital
CVC is the venture capital arm of a large corporation. The unit invests in early-stage startups and more mature businesses that align with the parent company’s strategic interests. A more risk-averse form of investment than venture capital, CVCs pay greater attention to the quality of products and services and customer experience the startups offer. As such, the goal extends beyond financial returns to building strategic, balanced, collaborative and mutually beneficial relationships.
A relatively newer concept than traditional VC, corporate venture capital offers startups valuable strategic and operational support, including specialised coaching and industry expertise. CVC investment also gives startups access to the wider corporation’s internal resources and networks, creating opportunities to reach new markets and client target groups. On the flip side, the corporation gains insights into new, relevant and innovative technologies that may impact them or their clients in the future.
From another angle, CVC units develop collaborative partnerships – synergies – that complement the parent’s mission and goals. Additionally, they can help identify startups that are a good fit for acquisition, although not all CVCs work that way – more on that below.
For venture capitalists, financial returns are the driving factor. They may have secondary objectives, but the ultimate aim is generating a high return on investment (ROI). That’s achievable via two exit strategies for the startups they fund: flotation – an initial public offering (IPO) – or acquisition. The success of both depends on the company’s performance and valuation.
Indeed, according to an article posted on Global Corporate Venturing (GCV), “VC-backed startups prioritise growth over quality.” But focusing on a “blitzscaling” strategy doesn’t work for most. Other factors should come into play, like operational stability, sustainable growth and customer satisfaction. That’s where CVCs enter the equation.
SSV: founder-centric, business-orientated and tech-driven
Sopra Steria Ventures is a prime example of corporate venturing in action. Launched in 2019, the main aim was exposing ourselves to the innovation ecosystem and market trends through startup investments. For this purpose, investments were made through sectorial VCs. The unit changed direction in 2023, away from solely VC investing towards venture capital itself – synergies-centred and more internationally oriented.
The goal was to build on the existing solid foundations and expand our reach by accelerating synergies between startups and Sopra Steria Group. Achieving that involved developing and implementing a new strategy, including recruitment, governance, investment phases, business processes and setting up a CVC platform dedicated to supporting our synergies with startups.
We look to go beyond investing to startup programme management: co-designing an offering, running a pilot, testing the value proposition, and going to market with various clients. As part of that, we identify objectives and key results (OKRs) and key performance indicators (KPIs) and co-create a clear and tangible roadmap.
Additional services include creating open innovation solutions, an increasingly popular phenomenon, per our 2023 report. For example, for startups in the acceleration phase, the group Scale Up initiative offers coaching and technology expertise and helps match them with potential clients, helping find “common ways of working and cooperating”.
It’s about leveraging a CVC platform: activities that aren’t related to direct investment, including talent recruitment, sourcing, due diligence, marketing and business development.
Indeed, Liz Arrington – Co-Founder and MD of the GCV Institute – believes “programmes that are most successful have been able to align investments with business development activity”. She also talks about “landing the value” corporate venturing, ensuring “the investor relationship creates some value for the startup and corporate backer,” be it market insights or collaborations.
Where is Sopra Steria Ventures investing?
Today, SSV supports early-stage startups (between Seed and Series A) via strategic partnerships and/or investments from €100K to €1.5 million. Our focus is on business-to-business (B2B) European tech startups: service-as-a-software (SaaS), artificial intelligence (AI), virtual reality (VR), cybersecurity, quantum supporting verticals such as finance, aerospace, defense and security, and more.
The process involves outlining how we see a common ourfuture for the next 12 to 14 months, from marketing and events to technological maturity. Sopra Steria Ventures’ direct and indirect investments and partnerships include for example:
- SkyReal (VR technology company) – part of our Startup Programme, and as a result, can respond to tenders with higher contract value and collaborate with large Sopra Steria Group accounts.
- Albert’s AI-enabled HR solution (also part of our Startup Programme) – built a brand-new co-designed offer with Sopra Steria’s HR Software and Sopra Steria Next.
- Particeep’s insurance and banking digital distribution solution – built a brand-new co-designed offer with Sopra Steria’s Real Estate Software.
- Algoan’s open finance credit-scoring solution – built a brand-new co-designed offer with Sopra Banking Software (SBS).
- Glimps’ cybersecurity technology based on deep learning – leverages Sopra Steria Group’s expertise to succeed in new use cases with clients.
- Langdock’s generative AI platform – leverages Sopra Steria Group’s expertise to succeed in new use cases with banking clients.
Can CVCs and VCs collaborate?
Startups aren’t the only ones working with CVCs: VCs are also in the picture. In terms of collaborating, both parties bring cash to the table. Additionally, corporate venture capitalists have business market knowledge and clients to draw on, and they can benefit from a pool of specialised talents internally and externally. Meanwhile, VCs may have ex-entrepreneurs, scale-up operators and exit clients.
A fruitful CVC-VC relationship is bidirectional and transparent: venture capitalists gain deal flow, market and business expertise for their portfolio of startups and corporate venture capitalists benefit from co-investment, open innovation and synergy opportunities.
When it comes to SSV, we work with VC firms and funds as limited partners (LPs) on “exploratory” themes like the future of computing, aeronautics, cybersecurity and sustainability, and have several European VCs in our network that can help startups grow. By collaborating with SSV, benefits like the following have been experienced:
- Quantonation: Quandela, which is part of the fund, signed a new contract with a Sopra Steria Group client.
- Tikehau: collaboration and synergies with Sopra Steria Group cyber experts, generating contracts with several fund startups like Glimps, Egerie and Yogosha.
- Truffle: Particeep, which is part of the fund, signed new major contracts with Sopra Steria Group client
- Wind Capital: open innovation workshops and an event took place to connect sustainable startups with sustainable business units across the Group.
Synergy-centred mindset
Sopra Steria Ventures brings an array of skills to the table, from entrepreneurs who’ve previously worked at startups, unicorns and large groups to those with international experience. We aim to respond to startups within one month for collaboration and capital requests and close investment deals within four.