"Startup Investment, the Key to Business Survival in the Era of Digital Transformation"

Korea International Trade Association International Trade and Commerce Research Institute, Report on 'Corporate Venturing Trends and Implications'

[Asia Economy Reporter Kim Heung-soon] It has been argued that startups with innovative DNA must actively pursue corporate venturing, a startup investment strategy, to survive sustainably in the future.

The Korea International Trade Association's International Trade and Commerce Research Institute stated in its report "Corporate Venturing Trends and Implications," released on the 2nd, that the driving force of corporate innovation is shifting from traditional research and development (R&D) to startups.

According to the report, a survey conducted last year by the Massachusetts Institute of Technology (MIT) in the United States targeted 320 publicly traded companies with annual sales exceeding $500 million from eight countries including the US, Germany, China, and Korea. When asked "What will be the source of corporate innovation in 2025?" 44% answered "startups." This is more than four times higher than the 10% who chose startups five years ago. Conversely, only 29% of companies cited R&D as the source of corporate innovation in 2025, less than half of the 69% recorded five years ago.

Furthermore, with the average lifespan of existing established companies expected to be only about 12 years by 2027, the report advised, "Companies lagging in digital transformation and innovation should focus on 'corporate venturing' by collaborating with startups." Corporate venturing proceeds in three stages: 'startup observation → startup partnership → startup equity participation.'

According to the report, in the observation stage, companies become 'venture customers' by purchasing products and services from startups, efficiently attracting promising startups in the short term while pursuing strategic benefits from technology transfer. In the partnership stage, companies utilize specialized institutions such as corporate venture builders, incubators, and accelerators to directly nurture startups suitable for new business development or participate comprehensively in management aspects such as funding, founding team formation, and business development for discovered startups. Through professional incubation, exit to the investing company (parent company) is also possible.

Additionally, corporate venture capital (CVC) and startup mergers and acquisitions (M&A) correspond to the equity participation stage. In particular, CVC investment, which has emerged as an alternative to in-house R&D investment, recorded $78.7 billion in the first half of this year despite the impact of COVID-19, more than doubling compared to the same period last year, and is expected to reach an all-time high.

Kim Bo-kyung, senior researcher at the Trade Association, emphasized, "Since discovering, attracting, and nurturing promising startups have become core to corporate and national competitiveness, innovation momentum must be secured through corporate venturing," adding, "While strategically selecting corporate venturing methods according to corporate goals and situations, support should be provided from the perspective of expanding the market through startup growth to achieve a 'win-win' between companies and startups."

This content was produced with the assistance of AI translation services.