Most venture capital funds and buyout funds are referred to as financial investors because the purpose of investment is to earn a very big financial return on invested capital.

In comparison, strategic investors are motivated to invest in growth-oriented, privately-held businesses for strategic operating benefits as well as financial gain. Strategic investors, which include many large corporations around the globe, want early access to new ideas, developing technologies or innovative ways to make their own business run better.

How do corporations invest in entrepreneurial companies?

Some corporations operate their own venture capital funds to develop relationships with entrepreneurial companies or they may invest directly or co-invest with other financial investors to achieve their strategic objectives. Some corporations that operate venture capital funds include Microsoft, Comcast, Disney and many pharmaceutical companies.