Big Tech's Investment to Acquisition Pipeline
CVC-backed funding jumped 20% YoY last year.
But, if <1% of big tech venture investments lead to acquisitions... why invest?
1) Access to innovation
Big tech CVCs gain early visibility into companies building the future. CB Insights’ business graph data show that 42% of CVCs now prioritize access to emerging technology and partnerships over direct acquisitions.
2) Strategic business relationships
Our data show that CVC investments frequently lead to commercial partnerships. Of the big tech companies, Nvidia leads the way with explicit business relationships with over 40% of the companies they are invested in. Investing in complementary startups creates a network of companies building on their technology stack.
3) Talent wars
Even without full acquisitions, CVC investments help big tech companies build relationships with top talent. This creates potential talent acquisition opportunities through acqui-hires or executive recruitment – especially as the AI talent wars heat up.
While the historical view suggests that the CVC to acquisition pipeline isn’t particularly strong, big tech’s AI appetite, across both investments and acquisitions, may dramatically change the landscape.
Will big tech’s flurry of CVC activity turn into a flurry of M&A activity?