The sugar daddy gambit: Funding strategic alliances with Venture Capital

Why is Tandem Computers, a $1 billion a year computer firm, buying a minority equity interest in a company with less than 50 employees? Why is Eastman Kodak, with more than $12 billion in sales and spending over $1 billion on R&D, buying an 18 percent stake in a company with 35 employees? Why is DuPont, a $29 billion a year firm, also spending more than $1 billion a year on R&D, collaborating with a company with just 14 employees? Why is Pfizer investing $2.9 million in a company with less than 75 employees? None of these investments is expected to significantly boost these blue chip corporations' earnings per share in the near future, and the firms' managements are fully aware of the risks of getting involved with businesses they don't have time to run. When a mega‐giant firm invests in a tiny start‐up company, it's obviously prospecting for hot intellectual property and not just earnings growth.