Internal vs External Venture Units: Which Approach Is Right for You?

Are you interested in building a venture unit? Discover how internal vs external units work, so you can choose the approach that best fits your culture and resources.

Our corporate landscape is changing faster than ever, fueled by shifting customer behaviour, new technologies, and increased economic uncertainty - with cutting-edge startups further disrupting the status quo and making it harder for corporations to maintain a competitive edge. 

In response, companies like Samsung, Nike, Microsoft and others in the S&P 500 are building their own venture units, tailoring the approach to gain quick access to new revenue sources, markets, technologies, business models and capabilities. The ultimate goal? To boost portfolio diversification and non-core growth.

Today, venture units exist in all shapes and sizes, with different companies adapting the strategy to meet a variety of needs. One of the most crucial factors to consider when building your own venturing units is whether it should be external or internal:

  • Internal venture units leverage internal resources and capabilities to build ventures.
  • External venture units facilitate innovation through collaboration with startups. 

Let’s take a closer look at what each of these approaches entails, their benefits and how to choose the one that best fits your unique corporate goals and growth targets. But first, we’ll kick things off with a little context. 

What is a venture unit, and how does it compare to other structures?

A venture unit is a specialised division within a company that focuses on investing in, collaborating with, or building ventures. These units can be internal or external and are designed to drive growth, diversify business operations, and create strategic partnerships.

Corporate venturing efforts can take a variety of forms, but for the purposes of this article, we’ll be focusing on three of the most common structures: 

  • Venture units leverage corporate assets and capabilities to build new ventures.
  • Venture funds focus on funding rather than building ventures.
  • Hybrid units combine the benefits of investment and venture-building capabilities.

Each structure has various possible innovation strategies to choose from, each one with its own focus (e.g. internal or external), pros and cons. For more information on these individual strategies, check out our latest report.

Now that you know a bit more about venture units and the possible strategies in each type of venturing structure, let’s take a closer look at how internal venture units differ from external venture units.

Internal vs external venture unit structures: what’s the difference?

Internal venture unit structure

Internal venture units are designed to foster entrepreneurship within a company. They create a startup-like environment that encourages experimentation and risk-taking while operating within the company's existing structure and leveraging its assets to build, validate, and scale new ventures.

This structure is particularly effective at focusing on core activities, leveraging internal talent, and building the internal capabilities necessary to cultivate an entrepreneurial mindset throughout the company.

Some of the benefits of this structure include:

  • Building your internal know-how, experience and expertise
  • The opportunity to leverage your existing customer base and market channels
  • Growing a culture of entrepreneurship within your organisation
  • Greater control over the development and execution of new business concepts

Example: BASF’s Chemovator

Chemovator provides a safe environment for BASF employees to develop, validate and launch promising new ventures. It’s a place where “unconventional” and out-of-the-box products, business models and solutions can be tested and put into the market with the proper guidance, resources and expertise. 

External venture units

External venture units aim to foster partnerships between corporations and startups, where the company provides funding, resources, or access to its market, while the startup brings its entrepreneurial spirit and innovative ideas. These partnerships can take various forms, including investments, capital partnerships, and joint ventures. These units are designed to create external-facing ecosystems that facilitate innovation and collaboration with startups. They operate autonomously with their own resources, which enables them to fully leverage the ecosystem they create.

Lastly, external units tend to focus more on explorative innovation, often going beyond the core activities of the corporate or partner and pursuing a specific scope of their own. This approach allows for the exploration of new markets and business models, leading to the discovery of new opportunities for growth and development.

Some of the benefits of this structure include:

  • Fast access to new markets and technologies
  • The opportunity to tap into the entrepreneurial mindset and innovation of start-ups
  • The ability to test new business models and ideas with less risk and investment
  • The opportunity to diversify revenue and reduce reliance on traditional business models

Example: Sony Innovation Fund: Environment

The Sony Innovation Fund: Environment serves as one of Sony's venture capital branches, concentrating on investments and partnerships with startups dedicated to environmental sustainability initiatives. By doing so, Sony aims to diversify its portfolio and actively engage with the external startup ecosystem to uncover novel business opportunities that align with the company's long-term growth vision.

How do you decide between using an internal or external venture unit structure?

Here are a few factors to consider when making a decision:

Strategic considerations

How will your venture structure support your corporate strategy?



  • To source new innovations, tech, and capabilities.
  • Used as a first step to adopting an open innovation model and changing internal culture.
  • Mobilisation is achieved through ad hoc collaborations with startups.


  • More active and structured innovation programs and startup collaborations.
  • Used to build an ecosystem with different partners.
  • To build a portfolio of ventures with the aim of growth and scale.
  • Executing a replicable innovation process.



  • Exploitation of the core and early exploration of new technologies.
  • Greater focus on the core and early adjacent innovations.


  • Mainly aimed at exploration through investments.
  • A focus on adjacent and radical innovation, but some investments focus on late core.



  • Short (1-3 years) to mid-term (3-5 years) horizon.


  • Mid-term (3-5 years) to long-term (5+ years) horizon.



  • Mostly involves low-risk innovation initiatives and investments.


  • Can focus on many types of innovation risks.
  • Is the preferred scenario for high innovation-risk initiatives and investments.



  • Returns are more focused on intangible assets (e.g. new technologies, changing culture, connections with startups, etc.).


  • Returns can vary from more intangible benefits like capabilities, tech and expertise to more tangible financial returns.
  • The returns achieved depend on the venture structure's strategy and goals.



  • Though the focus is internal, the goal is to move towards open innovation. 
  • However, the ultimate goal is to generate a positive outcome for the corporate entity.


  • To actively build an ecosystem around the corporate, it's often necessary to collaborate with different partners.
  • The focus should be on generating positive outcomes for startups in order to achieve a long-term return on investment.



  • Part of the business unit or a specific innovation department. 
  • Integrated into the corporate.
  • Reporting lines can vary, with some reporting to heads of business, innovation, strategy, or even C-level executives.


  • Typically standalone legal entities that have close contact, collaborations, and interactions with the corporate.
  • These structures have their own executives and venture board, which may include C-level executives from the corporate entity.
  • Multiple partners lead to a looser structure with a venture board that is comprised of C-levels of these partners.
  • Close interactions between the external venture structure and its partner entities.

Operational considerations

How will you go about running and managing your venture structure and the relationship with the corporate?

Branding and marketing


  • Often do not have separate branding.
  • There may be some marketing and internal branding efforts to create awareness and mobilise people.
  • Outward branding is often project-specific corporate branding, like in the case of a hackathon.


  • Have their own branding and marketing perspective.
  • This can range from co-branding to having an entirely separate branding identity.
  • In cases where multiple partners are involved, the venture structure typically has a distinct branding that includes a reference to the partners.



  • Tend to focus on internal capabilities, leveraging resources from different business units, departments, or their own internal capabilities (e.g. coaches or facilitators).
  • May collaborate with external consultants and freelancers to complement their capabilities or address any lack of capacity.


  • Build their own capabilities, as their activities often require more specific expertise to run effectively.
  • May engage external consultants for specific domain expertise, independent advice, or to add capacity to their operations.



  • The focus is on increasing internal awareness around innovation, mobilising collaborators and supporters, and sourcing new capabilities.


  • Strong emphasis on cultivating a corporate entrepreneurship culture and promoting the external innovative positioning of the corporate entity.
  • This can help attract talent for both the structure and the corporate.



  • An operationally light environment, leveraging the capabilities of the business unit or department they are linked to.
  • Dependent on the corporate’s infrastructure and policies.


  • Typically run their entire operations separately from the corporate entity.
  • Often make their own choices in terms of infrastructure, technology, collaboration, and hiring policies.



  • Tend to focus on internal capabilities, either from the different business units and departments or their own internal capabilities (e.g. coaches, facilitators).
  • May also rely on collaboration with external consultants and freelancers to complement their capabilities or address any lack of capacity.


  • Require the building of their own capabilities, as their activities often require more specific expertise to run effectively.
  • May engage external consultants for specific domain expertise, independent advice, or to add capacity to their operations.



  • Typically part of the corporate’s organisation and not a separate legal entity.
  • In rare cases where a separate legal entity is set up, it's because it’s mandated by local law.


  • Typically separate legal entities.
  • This independent structure enables easier partnerships with other organisations or capital partners.

Financial considerations

How will you fund your venture structure’s activities and operations?



  • Part of the profit and loss (P&L) of the corporate.
  • Often linked to a specific business unit or department.
  • Their activities make them a cost centre. 
  • Some provide internal services to other departments, resulting in an internal service fee that flows back into the cost centre.


  • Have their own profit and loss (P&L) due to their separate legal structure.
  • Their funding comes from one or multiple partners.
  • Since they have a separate financial structure, they are able to run a separate financial strategy.
  • This can include their own financing and even creating an underlying investment fund to address their financial needs.



  • Typically do not have their own resources aside from staff and necessary operational overhead.
  • While some internal structures have separate physical locations, these are still considered to be part of the corporate entity's resources.


  • Have their own resources due to being operationally and legally separate entities.
  • While some may share resources with the corporate, this is typically done as a service.
  • Examples of separate resources include staff, infrastructure, locations, and suppliers.
  • Some external venture structures have multiple individual locations and even sub-structures designed to execute their own strategies or collaborate with partners.



  • Initiatives from internal structures tend to focus more on collaboration rather than making investments.
  • Sourcing is a typical internal activity that can lead to a collaboration or investment opportunity.
  • In cases where the investment opportunity arises from sourcing, the investment is typically made by the corporate entity itself.


  • External venture structures often focus on activities that involve investments.
  • Investments can be made by the venture structure itself or by a related corporate venture capital (CVC) fund (which may not always be visible).
  • Some investments are made on a project basis, where investors are specifically sought to co-fund a particular project or cohort.

Final thoughts

There’s no one-size-fits-all formula to choose between internal and external venture unit structures. It ultimately depends on your organisation's unique goals, resources, culture, and capabilities. 

Use the above information to guide your decision and find the venture unit structure that best fits your business and aligns with your growth strategy. For more details and inspiring real-world examples, be sure to check out our latest Bund report on the topic.


At Bundl, we help companies leverage their unique assets to boost innovation and accelerate growth. We’d love to be part of your corporate venturing journey and turn your vision into thriving new revenue streams.

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