12 September, 2023
Corporate-backed startups are more likely to survive

Corporate-backed startups are more likely to survive

Maija Palmer studied the role of corporates in corporate venturing leveraging PitchBook´s data in the 10-year period between 2013 and 2023. Although it dropped somewhat around 20% of funding rounds involve investments from corporates.

One aspect is that the support of corporates is generally broader than just financial support which would enhance the stability and chance for success of the startup.

In the investigation they looked at the percentage of companies going bankrupt as a percentage of the number of companies looking for funding. This is shown in the figure, which clearly shows that, although the number of bankruptcies is increasing the percentages for corporate supported startups is clearly lower.

This is the most prominent difference with the remark that there appears to be a increase in valuation relative to EBITDA for corporate supported startups if there is an exit. However in over 50% of the cases it is the corporate itself who acquires the company so one could also conclude that the corporate generally overpays.