Corporates broaden the venture toolkit

As corporations deploy capital through CVC, direct balance-sheet investments and LP commitments, the question is no longer whether to invest but which tool to use, when and why.

Corporate venturing is a flexible tool, and it is encouraging to see a more sophisticated understanding emerging at the highest levels of corporations.

Even so, it remains striking that corporates were involved in a record 82.6% of all US venture capital deal value in the first half of the year, according to PitchBook, as they poured capital into later-stage AI companies.

The headline figure reflects an important distinction. While CVC units continue investing in earlier-stage startups for strategic and financial returns, corporate development teams and chief executives are increasingly deploying balance sheet capital directly into technology unicorns to strengthen their own businesses. As Nagraj Kashyap, founder of Touring Capital and former head of Qualcomm Ventures and Microsoft’s M12, told PitchBook, this concentration of capital in a relatively small number of companies is driving the surge in deal value. (Disclosure: GCV is a limited partner in Touring Capital’s inaugural fund.)

Alberto Onetti, an adviser to corporate investors, captured the shift well: “The biggest AI bets are no longer being made by CVC teams. They’re being made directly by CEOs and corporate development executives, using the corporate balance sheet.

“Why? Because these are no longer financial investments. They’re about securing compute, proprietary models, cloud workloads and strategic control. The objective isn’t venture returns. It’s competitive advantage.”

This reflects a more mature appreciation of corporate venturing. Rather than an either/or choice, corporations increasingly recognise when different investment approaches should be deployed and how they complement one another. CVC spans both early-stage investments that provide insight into emerging technologies and later-stage, strategically significant investments tied to commercial objectives. Understanding the differing motivations, governance and expected outcomes is becoming increasingly important.

That logic extends beyond direct investing. Limited partner commitments to external venture funds are becoming an equally important part of the corporate innovation toolkit.

The broader venture market underlines why. Crunchbase reported that North American venture deal activity fell in both the second quarter and first half of the year compared with the same periods in 2024.

Yet GCV’s own analysis found corporate venture investors actually increased the number of investments they made in North America over both periods. Rather than retreating, corporates increased their share of overall deal activity.

Traditional venture firms, meanwhile, continue to face fundraising headwinds. Outside the top tier, many managers are struggling to raise successor funds, even as exits—many involving CVC-backed portfolio companies—picked up significantly during the first half.

That is positive news for investors waiting for distributions and should eventually recycle capital back into the venture ecosystem. The question is whether it will happen quickly enough, and broadly enough, to support the wider market.

Lux Capital’s Josh Wolfe recently told Fortune that of the more than 3,000 venture firms operating in the US, “90% of them won’t survive the decade.”

The fundraising data certainly points towards growing concentration. By the end of the first quarter, five US managers had raised $34.9bn across just 12 funds—more than half of global venture fundraising—while nearly 80% of worldwide commitments flowed to North American funds, according to PitchBook. Most of that capital went to established AI-focused franchises.

An oligopoly of venture managers serves few participants in the innovation ecosystem.

Corporations are responding by backing emerging managers. According to GCV’s analysis, more than half of venture funds closing in the second quarter included commitments from corporate investors, with much of that capital directed towards first-, second- and third-time fund managers.

Increasingly, LP commitments sit alongside direct investment strategies rather than competing with them. GCV’s World of Corporate Venturing 2026 research found that more than half of corporate venture units now invest as limited partners in external venture funds.

Building strong venture ecosystems requires both capital and capable managers. Helping corporates, institutional investors and fund managers work together more effectively is therefore becoming as important as backing the next generation of startups.

With that in mind, GCV is partnering with Kauffman Fellows, Stanford professors Ilya Strebulaev and Claudia Fan Munce, Ira Ehrenpreis—the early backer of SpaceX and Tesla—and leading institutional investors to launch the LP/GP Summit in San Francisco on 23 September.

The event is by invitation only. Register your interest here.