CVC complements more traditional R&D. While R&D teams within the confines of a company have tight budgets, time-to-market, and risk aversion, for start-ups it is all about innovation and experimentation. An investment in start-ups lets companies outsource part of their R&D-that is, to offload projects that are high-risk-high-reward. One implication is acceleration of innovation and a simultaneous distribution of it. A failure in one start-ups venture may be a success in another and so on.
Apart from this, if investments in CVC do well, then it can potentially bring inorganic acquisition options-this, which corporations can then bring innovations directly from start-ups inside the company. It then allows them to scale the technology with which they can merge to their existing products-thus gaining the benefit of compressing time-to-market and continuing to stay ahead of competition.