An operating business investing its own venture capital (a “CVC”) is usually a large, often public technology-based company engaged in selling products, technology and/or services. Generally, CVCs aim to invest in emerging companies (referred to herein as “startups”) for a combination of reasons that usually includes a mixture of: (i) obtaining a healthy financial return; and/or (ii) attempting to create operating benefits to their businesses or enhancements to their technologies.

Specific reasons for corporate venture investing may include (i) to license or sell the CVC’s technology or to license or buy a new technology that is complementary to its own, (ii) to enter into a joint venture utilizing the startup’s technology, products or services in conjunction with its own, or (iii) to support internal initiatives by utilizing the startup’s products, services or technology. Some CVCs invest with a higher priority given to creating operating synergies than to a financial return; some with mixed goals that vary with the facts. Importantly, CVCs generally have different goals than venture capital fund investors (“FVCs”). FVCs are investment firms whose primary goal, as distinguished from CVCs, is to invest in and promote the sale of equity interests in portfolio companies for a return of capital.

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