Insights into Corporate Venture Capital

Interview Snapshot

Rohit Yadav: Nicolas, thank you for joining us. How do you see the CVC landscape evolving over the next five years, especially in the context of geopolitics and corporate financial strength?
Nicolas Sauvage: Thanks, Rohit. To predict the next five years, it's useful to look at the past five. What I’ve seen is that corporate VCs and financial VCs are starting to appreciate each other more. This matters because ultimately, it's about supporting entrepreneurs. Corporate VCs bring superpowers from their parent companies—things financial VCs can't. Meanwhile, financial VCs bring financial discipline, strong board support, and network access.

Put both together on a cap table, and you're supercharging a startup. Going forward, I see this cooperation deepening. That said, not all CVCs are built equally. Many aren’t well designed—but I see the good ones growing and best practices spreading. My podcast, Corporate Venturing Insider, aims to share these so more people can do CVC well—and, ultimately, so entrepreneurs benefit from better-aligned, more effective corporate investors.

On geopolitics, venture capital requires forming hypotheses about uncertain futures. That includes thinking about possible U.S. political shifts, the U.S.-China relationship, India’s role, or what Singapore is doing well—like how Silicon Box chose Singapore for its base. It’s key to build portfolios around non-correlated hypotheses. For example, due to supply chain concerns, there’s increasing interest in tech that reduces reliance on critical materials like lithium or cobalt.

“Corporate VCs and financial VCs have started to appreciate each other more over the past five years… Not all corporate VCs are well designed—but the good ones are growing and best practices are spreading… CVC is all about making non-correlated hypotheses about the future.”

Rohit Yadav: You’ve used this term "non-correlated bets." Could you explain what you mean in the CVC context?
Nicolas Sauvage: Sure. There are two reasons to invest in non-correlated areas. First is financial: venture is governed by power law dynamics—most outcomes are zero, but a few return 50x or 100x. So, de-risking with uncorrelated investments is critical.

Second, it’s strategic. Our exploration job at TDK Ventures is to help TDK learn where to go—and not go—in the future. If we invest across diverse futures, we gather insights whether those bets succeed or fail. It’s about learning as much as it’s about returns.

Rohit Yadav: And, from long-term perspective, you follow those trends while making sure that they are uncorrelated.
Nicolas Sauvage: That's good for corporate VCs who have an exploration mission. You also have CVCs who have an exploitation mission, which is about engaging with startups that can leverage your existing platform, your existing services, your existing products. But in that case, it's more about diversification of use cases, for example, or verticals. But you still want to have enough financial diversification.

“When money doesn’t come back, even corporates start asking for financial returns…  Uncorrelated bets de-risk your portfolio and expand your strategic insights.”

Rohit Yadav: With supply chain localization and geopolitical shifts, how should corporates think about supporting CVCs?
Nicolas Sauvage: First, we need to accept that we’ll get many hypotheses wrong. That’s fine. The job is not to predict, but to imagine ideal futures—like clean nuclear fusion, fully electrified homes, or flying vehicles—and backcast to today. We then identify gaps and support entrepreneurs working to fill those gaps. That’s how we landed on investing in Peak Energy—a sodium-ion battery company—because we anticipated challenges with lithium supply. This mindset helps us navigate geopolitical challenges. It’s not about reacting to the news, but imagining the best possible outcomes and helping them become reality.

“CVCs with an exploration mission learn from successes and failures… CVCs with an exploitation mission engage with startups to leverage existing products and platforms.”

Rohit Yadav: Do you expect more corporates to launch their own CVCs? Or will they shift toward fund-of-funds and other structures?
Nicolas Sauvage: Strategically, I believe any company with over $1 billion in revenue and doing well cannot afford not to have a CVC. It's relatively inexpensive and can become a profit center. TDK Ventures, for instance, has been profitable for past four years. But you have to be patient—returns take time, often 7–10 years. CVC also delivers insights that can inform both short- and long-term strategy. If you do it well, it becomes a supercharged business development or strategy unit.

“CVC can be a profit center. We’ve been profitable for the past four years…. Fund-of-funds give geographic access and domain expertise without building in-house teams…. Every CVC should do at least some direct investing to truly learn from entrepreneurs.”

Rohit Yadav: How do CVCs look from a tactical standpoint—direct investments versus fund-of-funds?
Nicolas Sauvage: Direct investing is essential. It builds the intimacy and learning loop with entrepreneurs. That’s hard to replicate through fund-of-funds. However, fund investing can be a great starting point—especially for geographic access (say, Israel or India) or deep domain expertise (like quantum or crypto). You might invest $2–5 million and get access to top minds who give you strategic insights for your business. So, while I believe in direct investments, fund-of-funds can serve important tactical purposes.

Rohit Yadav: Let’s talk about stage focus. You invest early at TDK Ventures. Do you see regional differences in how CVCs invest across US, Europe, and Asia?
Nicolas Sauvage: It all depends on the CVC’s mission. For exploration, like us, early stage makes sense—Seed or Series A—because the market and tech are both nascent. For exploitation missions, Series B or C is more appropriate because the startup has proven its tech and market.

Occasionally, we invest in later-stage startups that are doing something new internally—a pivot or new product. But those are exceptions. We call all our investments "projects" instead of deals, to honor the life mission of these entrepreneurs. Regionally, I think venture is about risk-adjusted pricing. You need to balance the potential upside with the risks—and as a CVC, bring your mothership’s superpowers to reduce those risks.

Rohit Yadav: What are those corporate “superpowers”?
Nicolas Sauvage: They vary—but might include deep tech expertise, regulatory knowledge, global distribution channels, or just the credibility that comes with a major brand. These can help a startup de-risk their path significantly.

But corporates think differently than VCs. I wrote about this—corporations operate under a distribution law, where most outcomes are good. VC is governed by power law. In VC, you need to unlearn consensus-based thinking and get comfortable backing bold, even contrarian, bets.

Rohit Yadav: And geographically—where do you see the most momentum in CVC?
Nicolas Sauvage: I’m bullish on the U.S., hopeful for Europe, and curious about China. But I’m bullish on India and Singapore. India’s entrepreneurial landscape has transformed.

The best talent is staying, joining startups. There’s this “Jugaad” mindset—innovation under constraints—which is very aligned with what being an entrepreneur means. We’ve already made three investments in India, and we’re looking to do more. CVCs can help Indian deep-tech startups with de-risking, early go-to-market, and eventually global scale. That’s our ambition with the TDK Ventures India team.

“Corporates operate under distribution law—not power law—so you have to unlearn a lot to do venture right…. In corporations, you rely on consensus. In VC, you must be okay going contrarian…. CVCs are fragile individually but resilient as an ecosystem.”

Rohit Yadav: That’s a powerful vision. One final question: Where do you see gaps where CVCs can actually outperform traditional VCs?
Nicolas Sauvage: CVCs can be fragile—many get shut down—but as an ecosystem, they’re resilient and patient. When done poorly, CVCs are worse than financial VCs. But when done well, they can be better than even the best financial VCs.

The challenge is ensuring more CVCs are built right. No one sets out to build a bad CVC—they just often lack coaching. That’s why I’m so grateful to GCV and mentors like Paul Holland and Pete Moran, who helped me learn the craft. I now try to pay it forward through my podcast—sharing real, actionable best practices.

Also, we shouldn’t overlook regions like Brazil, Africa, and broader South America. With democratized tools like AI and blockchain, and the falling cost of compute, entrepreneurs everywhere now have a shot. That’s why we backed Groq—their founder Jonathan Ross wanted to make the cost of compute zero. If that happens, everyone wins.

Rohit Yadav: Nicolas, thank you for this masterclass in CVC thinking—deeply insightful and inspiring. Really appreciate your time.
Nicolas Sauvage: Thank you, Rohit.