Venture Capital funds seek to invest in science/technology based ventures or startups, with a great potential for scaling at a regional and global level, in order to support their growth and implement the strategic plan defined by the entrepreneurs. The objective of VC investors is to make the investment profitable in the medium term (between five and ten years), finally exiting the project through an exit (through the sale, opening of the company on the stock exchange, among others). VC investments, in general, have a high level of risk, but at the same time a high return potential. Therefore, VC funds generally invest in a significant number of companies to diversify their risk. They do this through minority ownership stakes, so it is common to find several investors in the same startup.

One of the main things to take into consideration is that a CVC is not CSR or just a startup contest, it is something strategic. Therefore, if this option is taken, time, resources and people must be dedicated. On the other hand, as this is a risky topic, there must be room for trial and error. For the same reason, it is advisable to start small, with a few startups, instead of immediately setting up a large fund. Other characteristics that a CVC should have are autonomy, flexibility and independence from the core business. Even so, it is advisable for it to be below the board of directors. Another relevant point is to understand that startups, under this structure, are partners and not just suppliers. Therefore, it is important to set up a linkage mechanism between the business and the startups to outline their work together. Finally, it is crucial to measure what is being done, not only the startups themselves, but also how they are impacting the business.

One of the main aspects evaluated is the team. For this reason, professional entrepreneurs are sought, with experience in the industry in which they are immersed and who, above all, are open to receiving advice from investors. Another point that is reviewed in detail is the product; the technology behind it, if it is scalable, if it solves a problem and what is its value proposition. It is also important to establish whether the product is in a growing market and that it is at least regional. Traction is another factor to be considered. Both the maturity of the business and the market response, i.e., whether there is a demand for the product, are reviewed. Finally, the funds look for the startup to have an element that makes its business unique.

More than 10 years ago, Corfo generated lines of matching funds to create venture capital funds in Chile. This system establishes that for every dollar that a fund invests, Corfo invests up to four dollars to create a fund of five. This increases the investor's profitability by up to 80%. The format is called debt capital, since if the fund does well it returns those four dollars as if it were a debt. On the other hand, Corfo has incentives to ensure that this investment has an impact in Chile, so it regulates that the funds are properly used through annual audits and periodic reports. On the other hand, the focus is on Chilean companies with scalability potential and that are developed from Chile, or on foreign startups, but that use the country as a platform for Latin America. This has led to the existence of more than 30 VC funds supported by Corfo in Chile.

By investing, theVC becomes a partner of the entrepreneurs, as he/she has a mentoring role and assists in strategic decision making. In general, they also have a place on the board of directors to help make long-term decisions for the company or decisions where the support of experienced people is needed. In terms of objectives, VCs have a slightly different role than other investors. VCs are very aggressive in terms of company value growth, numbers that should be between 20% and 40% per year. This implies that companies should have equally aggressive growth plans and not conservatively stick to organic growth. On the other hand, VCs think in the long term, i.e. staying between three and ten years in the companies.

The starting point is the interest in the business opportunity, of being able to incorporate a company in a portfolio or in a portfolio of companies with the same characteristics. The fund then sends a letter of intent, called a term sheet, to the founders of the company. In this letter of intent there is a set of obligations and rights for both parties, which, preliminarily, will be the input to build the shareholders' agreement if the investment is made. The term sheet includes the economic rights -remuneration of the manager, with the stock options that the executives and founders should have, among other aspects- and political rights -participation of the investor or investment fund in the board of directors with one or two directors-. Once the term sheet has been validated by both parties, the process of reviewing the most important accounting, financial and tax accounts begins, which is called due diligence. Subsequently, if the two previous points are validated, the shareholders' agreement is drafted. This includes aspects such as the liquidity preferences of the investor who is in a minority position, or the rights of a minority shareholder to show the sale offer to the company's shareholders first, among others.

Venture capital funds have different strategies with respect to engaging with the companies they invest in. In this context, there are two main benefits of receiving investment from venture capital. The first is financial support. The fund provides capital and the entrepreneur, in return, a percentage of his company. The second benefit is the external validation that occurs at the moment of receiving investment. Although this validation is a more indirect benefit, it has an impact on the company's customers and other stakeholders in terms of its credibility in the market. In addition, the startup can access the VC's network of contacts and the experience of investors. There are many problems that other startups have already experienced, so knowing them allows the entrepreneur to save time and avoid mistakes. Another benefit is the order and clarity of the information that is established during the VC's follow-up and involvement process. This generates a discipline that is vital when scaling the venture to an external or international market.

When the investor enters a venture, he/she will take a part of the company's equity, therefore the entrepreneur must be willing to cede that participation and, on the other hand, to relate to a new partner. This equity is directly related to the amount of money being invested and the valuation of the company, where the concepts of pre and post money appear. The pre money is the valuation of the company before the investment and the post money is the valuation reached after the capital has been invested. Equity is established with respect to the final valuation. But this relationship also has other implications. When the amount invested is considerable, there is usually participation in the board of directors. On a day-to-day basis, and especially in the early stages, the fund becomes an active partner, getting involved in operational matters, but not in micro management.