Known as corporate venture capital, this form of investing has seen an uptick in the past year as lumbering tech companies often find it easier to partner with nimble start-ups rather than build new products themselves.
These young companies, in turn, can gain access to top notch executives, engineers and technology through their corporate investors.
Corporate investment capital accounted for 14.9% of all venture deals in 2011, up from 13.6% in the year prior, according to the National Venture Capital Association.Here are five profiles of cutting-edge startups backed by tech's biggest names. Profitero Corporate Partner: IBM (mentorship, not investment) What It Does: Price monitoring software for retailers Profitero, an Ireland-based start-up which makes pricing analysis software for retailers, won IBM's (IBM - Get Report) entrepreneur of the year award earlier this month. The 13-person company helps retailers to properly price their merchandise by giving them access to data like how much their competitors are charging and which new products have their rivals started to sell. They can also monitor their competitors' shipping costs and stock availability through a Web-based dashboard.