What is the term for a corporation investing in external startups?

The term for a corporation investing in external startups is known as Corporate Venture Capital. This practice involves larger companies allocating resources, typically in the form of equity investment, into emerging startups that align with their business strategy or portfolio. By engaging in corporate venture capital, companies aim to foster innovation, gain insights into new technologies, and potentially acquire new business models that could enhance their core operations.

Corporate venture capital differs from traditional venture capital as it is predominantly conducted by established corporations rather than independent venture firms. These investments can provide startups with financial backing as well as access to the company's network, expertise, and resources, making it a strategic move for both the investing corporation and the receiving startup.

Angel investment, private equity, and seed funding represent different avenues of financing that are typically associated with earlier stages of a company’s lifecycle or investments made by individuals or firms that are not directly aligned with large corporations. Each has its unique characteristics and motivations, distinguishing them from the broader strategy encompassed by corporate venture capital.