Why Corporate Development is the Natural Home for Venture Studios

The Evolution Toward Strategic Alignment in Organizational Positioning

Corporate development teams excel at “buy” through sophisticated M&A and “partner” through strategic alliances and corporate venture capital. Yet most lack systematic “build” capabilities for creating new companies from scratch. This gap becomes expensive when attractive markets lack suitable acquisition targets, partnership opportunities don’t materialize, or organic development faces resource conflicts.

Venture studios complete corporate development’s strategic framework, but most programs don’t begin there. The Global Corporate Venture Builder 2025 report reveals fragmented starting points: 29% initially report to chief innovation officers, 30% to CEOs, 23% to chief strategy officers, and only 22% to corporate venturing heads who typically sit within or adjacent to corporate development. This dispersion reflects the experimental nature of corporate venture building. Programs start where entrepreneurial champions have authority and enthusiasm rather than where long term strategic alignment suggests they should mature.

The question isn’t where venture studios start, but where they should evolve as they mature from experiments into institutional capabilities. Corporate development represents the natural organizational home for sustained venture building, offering mission alignment, multi-year strategic mandates, and comprehensive exit pathway capabilities that alternative placements cannot match. Understanding this evolution helps corporations transition programs from their experimental starting points toward sustainable institutional positioning.

Why Alternative Starting Points Create Constraints

Most venture studio programs begin in functions with enthusiastic leadership rather than optimal strategic fit. As programs mature and require sustained institutional support, these initial placements reveal structural limitations.

Innovation Functions provide natural experimental starting points but face scaling constraints:

• Commercialization expertise gaps: Innovation teams excel at technology development but lack experience in entity formation, capitalization structures, and exit pathway execution. When promising prototypes require spinning out as independent businesses, innovation leaders navigate unfamiliar territory around legal entity structuring, founder equity allocations, board composition, and eventual integration or external investment pathways.

• Budget authority for experiments, not operations: Innovation budgets fund R&D pilots and proof-of-concepts, not multi-year company operations. As ventures progress beyond validation into scaling, they require capital commitments that exceed innovation function authority. The program must either migrate to functions with appropriate budget authority or face perpetual capital constraints that undermine venture development.

• Misaligned expectations and metrics: Innovation metrics emphasize proof of concepts, pilots, and technology validation, not the multi-year commercial development venture building requires. Innovation leaders face quarterly reviews evaluating R&D pipeline productivity. Commitments to ventures requiring years before demonstrating commercial success create internal friction, ongoing justification burden, and heightened career risk.

• Exit pathway limitations: Innovation functions naturally gravitate toward technology handoffs to business units, yet ventures often require more diverse exit strategies. The GCV reveals that 43% of ventures integrate back into parent businesses, but 25% pursue minority spinouts, 19% become majority-owned subsidiaries, and 13% use licensing arrangements. When markets demand minority spinouts with external venture capital or majority subsidiary operations, innovation teams lack the frameworks and decision authority to execute effectively.

Strategy Functions offer intellectual alignment but operational gaps:

• Analysis versus execution: Strategy teams identify opportunities and recommend approaches but don’t build companies. Ventures require operational capabilities from entity formation, capital deployment, team recruitment, to operational scaling. Capabilities that sit outside of strategy function mandates. Adding these operational responsibilities either duplicates corporate development resources or creates dependency relationships that slow execution.

• Resource competition with core mandate: Supporting executive planning cycles, board presentations, and strategic initiatives conflicts with venture building’s intensive operational demands. When quarterly board materials compete with venture go/no-go decisions, the urgent strategic planning typically wins priority, leaving ventures without timely decision support.

• Limited budget authority: Strategy functions influence capital allocation but rarely control deployment. Ventures requiring rapid capital decisions wait while strategy teams prepare presentations and negotiate budget approvals. Delays that undermine competitive positioning when markets demand aggressive execution.

Line of Business Placement provides domain expertise from a specific business unit but creates operational conflicts:

• Resource prioritization pressures: Quarterly operational targets dominate business unit priorities. When pressure increases to meet near-term goals, venture resources shift to core operations. This pattern repeats: early enthusiasm, gradual resource commitment, pressure as quarterly targets come under threat, reallocation of venture talent and budget to operational priorities. Ventures never receive consistent support through complete development cycles.

• Timeline misalignment: Business units operate on quarterly cycles; ventures require multi-year patience. Market validation typically requires 6-12 months, with another 6-24 months for initial scaling. Business unit constraints force premature assessments using quarterly metrics inappropriate for venture development stages.

• Potential Strategic conflicts when ventures succeed: Ventures in adjacent markets initially complement business unit offerings. As ventures succeed and grow, they may increasingly compete for the same customers, creating internal conflicts. Business units that initially championed ventures grow hostile when success threatens their own revenue, lobbying to constrain or acquire ventures on terms that eliminate competitive advantages.

• Talent and compensation misalignment: Business units optimize for operational excellence with compensation structures emphasizing consistency and internal equity. Attracting entrepreneurial talent requires startup-style equity and risk-based compensation that creates friction with business unit norms. The GCV finding that only 20% of programs offer startup-style equity reflects this constraint. HR struggles with compensation structures that ventures need for competitive talent acquisition since success could mean entrepreneurs are better paid than the C-suite.

Organizationally Orphaned Programs offer experimental autonomy but institutional vulnerability:

• The organizational orphan problem: Studios without natural functional homes struggle to maintain executive sponsorship as priorities shift. While 44% of startup-phase programs report to CEOs, only 10% of resilient programs maintain CEO reporting. The transition from CEO “pet project” to institutional capability with multiple stakeholders represents a critical evolution that standalone studios often fail to navigate. Without natural executive sponsors in functional organizations, studios face challenges securing resources, resolving conflicts, and maintaining legitimacy during inevitable setbacks.

• Budget vulnerability: Operating outside normal funding mechanisms, standalone studios face constant justification during annual budget cycles. Without natural budget homes in existing functions, studios compete against investments with clearer returns and shorter paybacks, becoming obvious targets when cost reductions become necessary.

• Integration challenges: Organizational separation creates friction in sharing intelligence and coordinating with corporate functions. Studios identify attractive acquisition targets but lack direct relationships with M&A teams. Intelligence about partnership opportunities doesn’t reach business development teams. Market insights remain siloed rather than enhancing decisions across the corporation.

Why Corporate Development Provides the Natural Evolution

As venture programs mature from experiments into institutional capabilities, corporate development offers structural advantages that alternative placements cannot replicate. The strategy, operations, and mandate of corporate development align naturally with sustained venture building requirements.

Mission and Mandate Alignment

Corporate development exists to identify and pursue strategic growth opportunities augmenting core and expanding operations, precisely the mandate venture building serves. M&A, strategic partnerships, CVC investments, and venture building all represent mechanisms for accessing external growth opportunities. Positioning venture studios within corporate development aligns with existing mission rather than requiring new mandate justification.

Corporate development teams already work on multi-year timeframes that venture building demands. M&A transactions span 6-18 months from identification through close. Strategic partnerships require years to generate returns. CVC portfolios mature over 5-10 year horizons. This multi-year strategic orientation matches venture building needs better than innovation’s annual R&D cycles, strategy’s quarterly planning rhythms, or business units’ monthly operational targets.

Most critically, corporate development mandates patient capital deployment when opportunities warrant. While individual investments face scrutiny, corporate development doesn’t require every initiative to succeed. Portfolio thinking already governs how these teams evaluate risk and return. Ventures receive the patient capital and risk tolerance they require without the quarterly justification pressure that undermines programs in other functions.

Mark Simoncelli, former Chief Revenue Officer of Mach49, reinforces this positioning: “Corporate development can be the right home if it operates as a strategic capital allocator rather than just an acquisition team. It already manages build, buy, and partner decisions, and a studio adds the missing build capability. Studios tend to struggle in parts of the organization that do not have investment discipline or authority to move capital.”

Decision Authority and Budget Capabilities

Corporate development teams possess decision authority spanning entity formation, capital deployment, and exit pathway execution that ventures require. They structure Delaware C-Corps, negotiate capitalization tables, establish board governance, deploy capital through multiple financing stages, and execute acquisitions, divestitures, and spinouts routinely. These capabilities represent core competencies rather than peripheral activities requiring expertise development.

The budget authority proves equally critical. Corporate development controls capital envelopes for external growth initiatives, enabling multi-year commitments that ventures demand. Rather than annual budget justifications competing against operational priorities, ventures receive capital commitments aligned with development timelines and strategic objectives.

Corporate development positioning solves this governance challenge by providing decision rights and budget authority aligned with venture building requirements rather than innovation experimentation or operational execution models.

Comprehensive Exit Pathway Integration

Ventures require diverse exit pathways based on strategic fit, market conditions, and performance. The GCV reveals that 43% integrate into parent businesses, 25% pursue minority spinouts, 19% become majority subsidiaries, and 13% use licensing. Corporate development possesses capabilities across all pathways. As Jasdeep Sawhney of InMotion’s Corporate Ventures Studio explained: “We’re never sure right from the beginning whether a venture is going to spin in or spin out,” so ventures need separate legal entities to preserve optionality. Corporate development enables this flexibility through capabilities spanning all exit mechanisms

Integration into business units: Corporate development teams execute post-acquisition integrations routinely, understanding how to transition ventures into operational organizations while preserving value. They navigate organizational politics, manage stakeholder expectations, structure integration teams, and coordinate resource transfers. These capabilities transfer directly to integrating studio ventures into business units and building for that transition from day one.

Minority and majority spinouts: Corporate development teams structure divestitures, carve-outs, and minority sales. They understand how to position ventures for external investment, structure governance that protects parent corporation interests while providing operational autonomy, negotiate with venture capital and private equity investors, and manage ongoing relationships with partially-owned entities. Studio ventures requiring external capital or market independence benefit from this expertise.

Strategic partnerships and licensing: Corporate development teams negotiate complex partnership arrangements and licensing agreements. When ventures create intellectual property or capabilities valuable to external parties, corporate development structures arrangements that capture value while maintaining strategic optionality.

Validation and de-risking for technology integration: Building ventures validates not just market opportunities but also technology integration pathways. Ventures can develop integration-ready technology stacks or demonstrate technology evolution paths that reduce risk for eventual business unit adoption. This validation function provides immediate strategic value even before ventures achieve commercial scale, justifying continued investment through corporate development portfolio logic.

Intelligence Integration and Strategic Coordination

Corporate development teams coordinate with strategy on opportunity identification, innovation on technology assessment, business units on integration planning, and finance on capital deployment. This coordination capability proves essential for venture studios generating market intelligence valuable across multiple functions.

Market intelligence from venture operations informs M&A target identification, partnership evaluation, CVC investment decisions, and strategic planning. Corporate development positioning ensures this intelligence flows to teams who can act on it rather than remaining siloed in separate organizational units. The intelligence function becomes a strategic asset enhancing all corporate development activities rather than a standalone venture studio benefit.

Build-Buy-Partner Decision Framework in Practice

Corporate development positioning enables systematic evaluation of growth opportunities using the optimal mechanism. Rather than defaulting to acquisition or limiting options to available pathways, teams can assess each opportunity across build, buy, and partner alternatives using consistent strategic and financial frameworks.

Consider a financial services company evaluating opportunities in embedded lending for e-commerce platforms:

Build Assessment: Customer discovery reveals e-commerce platforms face significant integration challenges with existing lending providers. They want white-labeled solutions with rapid deployment and flexible underwriting. Requirements current market offerings don’t meet well. Building a venture could address these gaps, with parent company advantages in risk management, compliance infrastructure, and capital markets access providing sustainable competitive advantages. Estimated investment: $2 million over 24 months to reach Series A readiness.

Buy Assessment: M&A analysis identifies three potential targets. The strongest candidate has good product-market fit but commands a $25 million valuation despite limited traction, with significant integration risk from founder dependency. More established alternatives require $85-120 million with legacy systems needing complete rebuilds. All options face 12-18 month integration timelines with uncertain outcomes.

Partner Assessment: Strategic alliances with existing providers offer market access but require substantial revenue sharing (40-60% to platform partners). The parent company becomes a distribution channel rather than principal, limiting both strategic control and economics.

Corporate Development Decision: Build the venture. The $2 million investment compares favorably against $25-120 million acquisitions, addresses validated market needs using parent company competitive advantages, and delivers superior economics versus partnership revenue sharing. If the venture validates successfully, corporate development can reevaluate from a position of strength. Potentially acquiring into a business unit, spinning out with external capital while retaining strategic position, or maintaining as a wholly-owned subsidiary.

This integrated framework creates strategic flexibility impossible when build capabilities don’t exist. Without systematic venture building, corporate development defaults to acquisition despite unfavorable valuations or forgoes opportunities entirely, ceding attractive markets to competitors.

The Maturation Path: Evolving Toward Corporate Development

Most venture studios don’t start in corporate development. They begin where entrepreneurial champions have authority in innovation functions, strategy teams, or CEO initiatives. This experimental positioning makes sense early on when programs require risk-tolerant sponsors willing to pilot new approaches. As Mark Simoncelli of Mach49 observes: “In the early stages, the studio benefits from being close to senior leadership where it has credibility and quick access to funding. As it matures, it often needs more independence. The moment internal processes slow decisions more than external market tests, it is time to rethink where it sits.

The challenge emerges as programs prove value and require sustained support. Studios initially championed by innovation or strategy leaders face structural constraints as they scale: budget limitations, misaligned metrics, execution gaps, and sponsor fragility when leadership changes. Recognition of these constraints creates the imperative for organizational evolution.

Successful transitions occur deliberately over several quarters, maintaining venture momentum while integrating governance, processes, and stakeholder relationships with corporate development. The transition succeeds when studios operate as integral corporate development capabilities alongside M&A, partnerships, and CVC. Where venture studios contribute intelligence that enhances all growth decisions while pursuing selective venture building based on validated opportunities.

Implementation Essentials for Corporate Development Positioning

Successful corporate development positioning requires attention to several critical dimensions:

Multi-Year Strategic Mandate

Corporate development teams understand multi-year strategy execution and work across extended timeframes supporting strategic objectives. This orientation provides ventures the patient capital and sustained support they require. While securing formal 3-5 year capital envelopes may not always be feasible, corporate development teams maintain long-term mandates and strategic direction understanding that transcends annual budget cycles. They deploy capital patiently through development cycles rather than demanding quarterly progress demonstrations.

Governance & Integration

Studios positioned within corporate development benefit from existing governance frameworks. Board composition, reserved matter authorities, information barriers, and decision escalation processes already exist for M&A, partnerships, and CVC investments. Extending these proven frameworks to venture studios leverages institutional knowledge rather than developing novel governance from scratch. Regarding structure: 34% of programs operate within integrated units, 20% as separate legal entities. Separate legal entities gain additional operational autonomy while maintaining strategic alignment through tight governance frameworks. Both work if governance provides the right operational environment.

Metrics Aligned to Corporate Development

Track intelligence utilization (M&A team queries, partnership insights applied), capital efficiency (cost per venture versus M&A alternatives), and exit outcomes (integration values, subsidiary profitability, spinout returns). These metrics align with how corporate development evaluates any growth initiative, strategic value creation and eventual financial returns rather than innovation activity metrics or quarterly operational performance.

Talent and Compensation Frameworks

Corporate development functions already employ talent with non-standard compensation tied to deal success. Extending similar frameworks to venture builders creates less organizational friction than in business units optimized for operational consistency. The GCV finding that only 20% of programs offer startup style equity reflects constraints in innovation and business unit placements; corporate development positioning facilitates competitive compensation structures that attract entrepreneurial talent.

Completing the Strategic Framework

Corporate development positioning enables venture studios to complete the build-buy-partner framework most corporations leave incomplete. Systematic evaluation across all three mechanisms creates strategic flexibility impossible when build capabilities don’t exist, as the embedded lending example demonstrates. Market intelligence from venture building enhances every corporate development decision from M&A target validation, partnership structuring, and CVC investment assessment.

As corporate venture building matures from experiment to institutional capability, positioning determines sustainability. Programs within corporate development gain mission alignment, multi-year mandates, comprehensive exit pathways, and natural integration with growth decision-making. The corporations that successfully position studios within corporate development will systematically outperform competitors by identifying targets earlier, structuring partnerships more effectively, timing market entries precisely, building ventures profitably all powered by venture studio intelligence. They transform corporate development from functions that buy and partner into organizations that also build systematically and strategically.

Citations:

https://2025.globalventurebuilding.com; Accessed through https://globalventurebuilding.com

https://newsletter.venturestudioforum.org/p/the-governance-framework-for-corporate

https://newsletter.venturestudioforum.org/p/the-cost-of-company-creation

https://newsletter.venturestudioforum.org/p/the-fatal-flaws-in-the-venture-studio

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About the Author

Matthew Burris serves as the Senior Director of Research at the Venture Studio Forum, where his mission is to transition venture studios from an emerging asset class to an established asset class. In this role, he leads the creation of the rigorous data frameworks and due diligence standards required for institutional adoption.

This research is built upon the proprietary insights Matthew developed as Partner & Head of Insights at the 9Point8 Collective and study of over 500 venture studios globally. By codifying the methodologies from his advisory work with corporate, university, economic development, and private studios, he provides the Forum with the foundational architecture needed to define the industry.

Connect with Matthew on LinkedIn.