Corporate Venture Capital Is Splitting In Two
Last month, PayPal confirmed its wind down of PayPal Ventures, the corporate venture arm it launched in 2016 and grew to more than $850 million across three funds. The company hired Jefferies to explore selling portfolio stakes on the secondary market, putting positions in companies such as Plaid and Anchorage Digital in play. The news also arrived weeks after Fidelity International quietly closed its London-based venture unit.
Two corporate venture programs shutting down inside six weeks invites speculation that corporations are retreating from venture capital, but in fact the opposite is true.
Measured in dollars, corporate venture has never been stronger. According to Bain Capital, corporate investors participated in 68% of global AI deal value in 2025 — venture’s strongest funding year since 2021.
Meta, Nvidia, Google, Disney, SpaceX and ASML all led billion-dollar rounds into AI companies last year, per Crunchbase data. Nvidia by itself made more than 40 startup investments and appeared in 13 of the 20 largest AI financings. Meta paid $14.3 billion for its stake in Scale AI. Salesforce Ventures 1 and Cisco’s venture arm backed Anthropic’s $3.5 billion Series E.
Amid this strength, though, corporate venture is also quietly splitting in two, and the proof is buried inside the record numbers. Bain attributes the elevated corporate participation largely to Big Tech, and the billion-dollar rounds trace back to the same short list of names.
Take that handful out of the data and the year looks very different. Venture capital itself went through the same sorting over the past decade, as mega-funds absorbed more and more of the capital while everyone else competed for allocation, and corporate venture is now following the same script. The people with the most at stake are the smaller funds and startups downstream.
And notice that the wind-downs are coming from serious programs. PayPal’s arm ran for a decade and backed more than 80 companies, and Fidelity International manages hundreds of billions of dollars. Size never protected either one, and the dividing line runs through the mandate. For Nvidia, Alphabet, Salesforce and Cisco, startup investing is a core strategy, funded off enormous balance sheets, because their businesses depend on owning a position in the technology cycle. Nvidia backs the companies that build on its chips, and that commitment survives budget season. For most other corporations, venture is one strategic priority among several, competing for capital with the core business itself.
To be clear, there’s nothing wrong with that. When a new chief executive commits to finding $1.5 billion in cost savings, winding down even a well-run program can be the disciplined call, and disciplined capital allocation is what shareholders ask of public companies. Corporate venture has always moved in cycles, and the waves of closures after 2000 and 2008 said far more about parent balance sheets than about the returns on offer. Individual programs are mortal, but the asset class keeps growing.
When I started my career, technology drove roughly 2% of the American economy, and today it drives a double-digit share of GDP and nearly 40% of the stock market.
Who feels it first
For smaller funds and their portfolio companies, the split is already changing the math. Silicon Valley Bank‘s State of CVC survey finds corporate funds pursuing fewer, more targeted deals, and the share using the secondary market jumped from 15% in 2024 to 22% in 2025; PayPal’s Jefferies mandate takes that same path at the scale of an entire program.
When a corporate arm winds down mid-life, its portfolio companies lose a strategic backer and a source of follow-on capital at once, the smaller funds that syndicated alongside it lose their anchor for the next round, and a secondary sale replaces a committed partner with a financial buyer.
I spend my days working with early-stage venture funds, and I’m watching this pattern develop in real time: strong companies outside AI, with a departing corporate backer on the cap table, heading into rounds their existing syndicate can’t fill alone.
The lesson for startup management teams and VC fund managers is to plan for corporate capital to come and go. The pro rata rights that funds hold in their best companies become most valuable at exactly these moments, when a strategic investor steps back and ownership in a breakout company becomes available to whoever can fund it.
Smaller funds should line up committed follow-on capacity before their winners come back to market, so a corporate partner’s exit becomes a chance to buy more of a company they already know well. Founders should run the same exercise from the other side of the table and know today which investors on their cap table can carry the next round.
Corporate venture will keep growing because the forces behind it keep growing, and programs will open and close along the way, as they always have. What’s changed is the sorting: permanent capital consolidating at the top of the market, and everyone else learning to plan around that fact. The funds and founders who prepare for it will come out the other side owning more of the companies that matter.
Steve Brotman is the founder and managing partner of Alpha Partners, a growth-equity firm that co-invests in venture-backed companies by leveraging the unused pro-rata rights of more than 1,000 early-stage VC partners.
Related reading:
Illustration: Dom Guzman
