Business

Why corporate venturing makes sense for family businesses

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Many might say a family business represents the antithesis of a startup. Family businesses are old economy, startups are new economy, so the argument goes.

But the business world is multi-faceted and more nuanced than this simple explanation. Many family businesses can be just as new economy as any startup. And startups will eventually become old.

What is for sure is the nexus between the two is growing. Family businesses want to engage with venture-type businesses to make them more dynamic. Startups want family business capital to grow their companies.

Where they meet is increasingly in the world of corporate venturing. For years now, big brand family businesses like BMW, Ford, and Koch Industries have financed corporate venturing/private equity groups to help them grow their core businesses, but also to lead them down new paths of business development.

Now more family businesses are joining their ranks and setting up corporate venturing groups. As our list below of family businesses with corporate venturing arms, family businesses are embracing corporate venturing more than ever.

 

THE FULL LIST OF CORPORATE VENTURING GROUPS OF FAMILY CAPITAL’S 750 – BELOW

CASE STUDIES OF FAMILY BUSINESSES WITH CORPORATE VENTURING GROUPS

 

Family Capital in association with PwC has gathered the names of the corporate venture groups from the Family Capital 750 largest family businesses in the world as measured by revenues.

Of course, not all of the 750 have separate corporate venturing entities. Many still use the parent company as the driver to engage with the venture world, and/or their family offices. But an increasing number are setting up separate businesses to source venture/private equity deals and help them equip themselves to the challenges of disruptive business forces they all face.

“Family venturing has become very popular for bigger family businesses, especially in Europe, Middle East and North America,” says Peter Englisch, PwC’s global family business leader.

He adds: “It not only fosters the entrepreneurial spirit among the owning families, but corporate venturing is also a good way to engage the next gen.”

Corporate venturing may make a lot of sense to a family business looking to refresh its revenues and embrace the new economy. But the venture world isn’t without its challenges. Many startups don’t live up to the hype of their launch and end up failing. Investors can and do lose a lot of money by backing the ones that eventually don’t succeed.

Big family businesses like Ford, BMW, and L’Oreal have the balance sheets to ride out underperforming ventures they’ve backed. But mid-sized private family businesses might not have the wherewithal to be able to do so. They have to be more careful when they play in the venture world.

As PwC’s Englisch says: “In order to take full advantage of corporate venturing clear criteria and rules needs to be developed and applied – because the consequences of not doing so can cost a business dearly.”

But if done well, corporate venturing can offer family companies a coherent way of dealing with the business challenges they all face. A corporate venturing arm can also give them a good platform for future generations of their family to drive the business forward.

To access the Table in full, please click on its content and scroll right or left with your mouse. Or scroll down to the end of the Table and use the right/left scroll bar there.

Venture Groups of the Top 750 Family Businesses

wdt_ID Company name Family Capital 750 Rank Corporate structure: Public/Private Venture Group
1 Walmart Inc. 1 Public Store No. 8
2 Walmart Labs
3 Exor NV (Giovanni Agnelli B.V.) 4 Public Exor Investments Ltd/ Exor Seeds
4 Ford Motor Company 5 Public Ford Research & Innovation Ctr
5 Ford Smart Mobility LLC
6 BMW AG 7 Public BMW i Ventures B.V.
7 BMW Startup Garage
8 Cargill, Inc. 8 Private Cargill Ventures
9 Tata Sons Ltd 9 Private Tata Capital Limited
10 Koch Industries, Inc. 10 Private Koch Equity Development LLC
Company name Family Capital 750 Rank Corporate structure: Public/Private Venture Group

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