There are nearly 2,000 corporate venture capital (CVC) firms in existence, many hundreds of them created by first-time investors, according to Global Corporate Venturing.
As GCV also reports, last year alone, CVCs raised $41 billion in investment funds, mostly from their corporate parents.
Given Merck Global Health Innovation Fund’s (Merck GHIF) track record, I’m often asked as a long-time successful CVC investor to describe the business strategies used to ensure our scale and staying power. Merck GHIF is the digital health corporate venture capital arm of pharmaceutical giant Merck & Co. Merck GHIF was founded in 2010 with an initial allocation of $125 million. Today it’s a $500 million evergreen fund, and we’ve invested $800 million in more than 50 companies to date.
The four key strategies
No. 1: Developed an independent LLC with a defined investment charter
From the beginning, we set up an independent business structure with a well-defined investment charter. We created our investment model, strategy and expectations to ensure strategic and financial balance. As a seasoned corporate VC leader coming from Johnson & Johnson, I knew that there was not a corporate parent who says it’s okay to lose money. I knew that if we lost money as a fund, we’d be out of business.