Union Square Ventures Managing Partner Fred Wilson fired a shot across the bow of corporate venture capital on stage at the CB Insights Future of Fintech Conference: “[Corporate investing] is dumb. I think corporations should BUY companies. Investing in companies makes no sense. Don’t waste your money being a minority investor in something you don’t control. You’re a corporation! You want the asset? Buy it.”
He took corporate investing to task as being mostly for show: “Making a minority investment in something? What does that do? Make you look smart in front of your boss?”
Moderator Nathaniel Popper of The New York Times offered up the idea that smaller investments like these could give corporations access to startups, especially in the fintech space and “get them in the room” to hear what the startup is working on and see if it applies to their company.
“If you’re the startup, do you want them in the room?” Wilson countered.
Popper argued that apparently some startups were willing to entertain the notion, but Wilson was unconvinced, saying startups were using flawed logic and that either they couldn’t get money from anyone else or that the corporations were willing to shell out more money than a traditional VC would. Either way, he said it was a losing proposition for startups:
“They’re doing business with the devil.”