Venture investors are the hidden hand behind the most innovative companies surrounding us. According to research conducted by one of us (Ilya), venture capitalists were causally responsible for the launch of one-fifth of the 300 largest U.S. public companies in existence today. They have played an essential role in unlocking the power of the internet, the mobile revolution, and now artificial intelligence in all its forms. Apple, Google, Moderna, Netflix, Airbnb, OpenAI, Salesforce, Tesla, Uber, and Zoom—these firms disrupted entire industries despite initially having fewer resources and less support and experience than their mature, successful, cash-rich competitors. All these businesses could theoretically have emerged from within an established company—but they didn’t. Instead, they were financed and shaped by VCs. Indeed, we estimate that three-quarters of the largest U.S. companies founded in the past 50 years would not have existed or achieved their current scale without VC support.

Big companies and risk capital can be awkward partners. Here’s how to get corporate venturing right.

No one needs to be told how crucial innovation is to a business’s survival in a constantly morphing landscape. Corporate venture capital (CVC) is one of three main innovation mechanisms that large companies now deploy, along with internal R&D and innovation M&As. In recent years, CVC units have become increasingly important across geographical borders, industries, and technology sectors, helping companies to stay nimble and forward-looking — and to create new growth engines. In 2022, global CVCs invested almost $100 billion in about 5,000 investment rounds of VC-backed companies.¹ Over 100 new CVCs were created that year alone.

Venture capitalists don’t mind strike-outs, so long as they get their home runs. What can stock investors learn from that approach? 

Ricky Mulvey talks with Ilya Strebulaev and Alex Dang, co-authors of “The Venture Mindset: How to Make Smarter Bets and Achieve Extraordinary Growth,” about:

• The benefits of building an “anti-portfolio”
• Why it pays to get outside of your own four walls
• Lessons from a piggy bank auction

Here’s how people think great things happen in Silicon Valley: A bright-eyed startup founder sketches a groundbreaking idea on a napkin. The napkin is picked up by a savvy venture capitalist. The VC glances at the sketch, gets excited, and wires millions of dollars to the young entrepreneur. And a unicorn—that is, a company that will reach the $1 billion level in value—is born.

This narrative of high stakes, fast decisions, and a risky gamble is alluringly cinematic. It’s also a myth. And for anyone who wants to be a successful founder or investor, it’s a dangerous one.

“I’ve searched all the parks in all the cities—and found no statues of committees,” proclaimed the famous British writer G. K. Chesterton. VCs are well aware of inefficiencies and biases in groups; they also know that these biases are particularly dangerous in a highly uncertain world. And they know that team members with prepared minds can make the right call if they design a process to avoid these blind spots. In our research and work with VCs, we observed many specific practices with which VCs equip themselves. The next time you huddle in a room with your team members, you’ll be more likely to make a better decision with these four mechanisms we have learned from VCs. 

How venture capitalists approach risk has lessons that apply beyond Silicon Valley, according to a new book.

In most of the business world — and the world in general — the default setting is caution, consensus, and, above all, a low tolerance for bad bets. Venture capitalists are not wired this way. In their quest for the next Google, Amazon, or OpenAI, they run headlong into uncertainty and embrace contrarianism. They accept that failure is an option as they invest in deal after deal that never takes off.