Corporate VC: Making the Grade –

When it comes to venture capital funding, start-ups don’t just want the cash, they also want all of the skill sets, experiences and industry contacts that are attached to it. So it goes to reason that in most cases, the deciding factor comes down to which venture capitalist can provide the more value-added dollar.

More often than not, it’s the traditional VC firm; however, a surprising winner in the battle to provide the most valuable dollar is emerging: corporate venture groups.

To be sure, corporate VC disbursements have skyrocketed over the past five years – to $10.26 billion in 1999 from $392 million in 1995 – accounting for an increasing percentage of total disbursements.

In this month’s cover story, Associate Editor Alistair Christopher takes a look at corporate venture capital, which in the past has been criticized for doling out so-called “dumb money,” and explores the reasons behind its new found stature in the marketplace.

Corporate venture capitalists may be on the road to becoming a marketplace fixture, but they are very likely to encounter a few bumps on the way, such as being compensated on the same level as their more traditional counterparts. In this month’s feature, Senior Editor Alissa Leibowitz reports on why compensation is an increasingly paramount issue for traditional VC firms as well.

It appears that money talks, and VCs like listening to the sound of its voice. There’s no disputing the fact that VCs are extremely well paid for the job they do, but now with an abundance of opportunities in the market, firms are finding they need to entice their partners to stick around more than ever. To avoid such retention problems, firms increased the average total compensation package – salary plus bonus – of senior-level partners 89% to $1.04 million in 2000, according to a recent survey, conducted by William M. Mercer Inc. Performance & Rewards Consulting.

Senior-levels partners were not the only ones reaping the riches. Junior partners/principals saw their pay checks swell with an 82% increase, while managing general partners saw their compensation double.