Corporate venture capital (CVC) is a type of venture capital through which established companies invest in startup ventures. Based on the platform offered by the behavior theory of the firm, which is one of the mainstream theories of firm innovation, we introduce strategic reference point theory and analyze the mechanism how CVC affects innovation behavior of the young firms. CVC’s parent companies have a strategic intention to launch a long-distance search. By providing value-added service and exerting monitoring and control via CVC, CVC’s parent companies influence management attention of CVC-backed firms and promote them to incorporate innovation into strategic reference point content, which in turn results in more innovative behavior in these young firms. We develop a set of hypotheses derived from the theoretical logic and conduct empirical tests using Chinese companies listed on SME and GEM. Our results suggest that CVC-backed firms, which are invested by established companies with an intention of external search, are more innovative than other companies. The lower parent companies’ perceive their innovative performance, the stronger their external search intention, the more CVC-backed firms’ innovation.