Corporate Funding Rounds Account For Larger Share Of Venture Investment

In the past couple years, a larger share of U.S. startup investment has come from corporate funding rounds.

That was the broad finding from a Crunchbase data dive into U.S. rounds solely backed by a corporate investor. Such rounds accounted for 12% of total funding in 2023 — a high point in our survey and potentially a record-setting share. The strong showing was largely due to a single round — Microsoft’s $10 billion investment in OpenAI.

So far, 2024 is in second place for highest share of funding from corporate rounds, with 7.4% of the total. This is mostly due to Alphabet’s $5 billion investment into Waymo, the autonomous vehicle company spun out of Google’s labs.

Over the past six years, meanwhile, the share of funding coming from corporate rounds has hit a low of 1.5% of total investment and averaged around 5%, as charted below.

Corporate rounds indicate startup investment is becoming more strategic

While there’s no one-size–fits-all motive for those leading corporate rounds, in most cases companies are backing startups and private companies for strategic reasons, not just financial ones.

Microsoft, for instance, is less concerned with how much money and investor returns OpenAI will make. It’s more focused on how its technology and collaboration will help Microsoft stay ahead of the competition in AI adoption.

Disney’s $1.5 billion investment in Epic Games this spring was connected to plans to incorporate the entertainment and theme park giant’s content into its gaming platform. And the billions General Motors has poured into its autonomous driving subsidiary, Cruise, are of course all about helping GM stay abreast of the technology.

Given the strategic rationale for dealmaking, it’s not entirely surprising to see corporate rounds make a strong showing even amid a muted environment for exits. Corporate investors can see a boost to their brand even without a big exit on the horizon.