This paper examines the impact of government versus private independent venture capital (VC) backing on the exit performance of entrepreneurial firms. Our analyses are based on the VICO dataset, ...which avoids the coding problems of VC type in the Thompson Financial SDC dataset. The data indicate that private independent VC-backed companies have better exit performance than government-backed companies. Mixed-syndicates of private-independent and governmental VC investors give rise to a higher (but not statistically different) likelihood of positive exits than that of IVC-backing. Our findings are not influenced by the composition of the syndicate in terms of size and institutional heterogeneity. Our results remain stable after controlling for endogeneity concerns, selection bias, omitted variable bias, legal and institutional differences across countries and over time through several econometric techniques. Moreover, our results are not driven by: i) the holding period of the different types of VC investors; ii) the potential signaling effect of GVC towards IVC investors; iii) the firm's financial structure and net cash-flow ratio; iv) the investment stage; and v) the distance between the VC investor and the target company.
•Governmental (GVC) vs independent venture capital (IVC) impact exit performance•VICO dataset sponsored by the European Union under the 7° Framework Program•IVC positively impacts exit performance, GVC does not.•Positive impact of mixed syndicates, comparable with that of IVC•Results stable after controlling for syndicate size and heterogeneity
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK, ZRSKP
Entrepreneurial ventures are a key source of innovation. Nowadays, ventures are backed by a wide array of investors whose complementary asset profiles differ significantly. We therefore assert that ...entrepreneurial ventures can no longer be studied as a homogeneous group. Rather, we harness the inherent dichotomy in the profiles of independent VCs and corporate investors to study ventures' innovation outcomes. Our sample consists of 545 U.S. biotechnology ventures founded between 1990 and 2003 and backed by independent venture capitalists (VCs) or corporate VCs (CVC). We find CVCs' investees exhibit higher rates of innovation output, compared to independent VC-backed peers. Moreover, the performance of CVC-backed ventures is sensitive to their ability to leverage corporate assets, underscoring the role of CVC accessibility and FDA approval requirements as the mechanisms associated with CVC contribution.
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BFBNIB, FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, PNG, SBCE, SBMB, UL, UM, UPUK
Corporate venture (CV) units constitute vehicles through which firms may act ambidextrously, thereby increasing their longevity, but they suffer from a high failure rate. The authors examine why and ...how some CV units last significantly longer than others. They argue that CV units endure by developing an ambidextrous orientation themselves—they build new capabilities for the parent firm while simultaneously leveraging its existing strengths. They argue that CV units become ambidextrous by nurturing a supportive relational context, defined by the strength of their relationships with three different sets of actors—parent firm executives, business unit managers, and members of the venture capital community. Using primary data collected from 95 CV units over a three-year period, the authors test and find support for these arguments.
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NUK, OILJ, SAZU, UKNU, UL, UM, UPUK
Silicon Valley, Singapore, Tel Aviv--the global hubs of entrepreneurial activity--all bear the marks of government investment. Yet, for every public intervention that spurs entrepreneurial activity, ...there are many failed efforts that waste untold billions in taxpayer dollars. When has governmental sponsorship succeeded in boosting growth, and when has it fallen terribly short? Should the government be involved in such undertakings at all? Boulevard of Broken Dreams is the first extensive look at the ways governments have supported entrepreneurs and venture capitalists across decades and continents. Josh Lerner, one of the foremost experts in the field, provides valuable insights into why some public initiatives work while others are hobbled by pitfalls, and he offers suggestions for how public ventures should be implemented in the future.
Drawing on institutional theory, we examine how the institutional logics—taken-for granted norms, structures, and practices—of different types of funding partners influence young firms and their ...search for innovations. We test our hypotheses in a longitudinal study of a complete population of ventures in the minimally invasive surgical device industry in the U.S., supplemented by interviews with industry informants. We find that types of funding partners vary significantly from one another: they all provide resources, but their institutional logics differ. Venture capitalists (VCs) pick young firms with significant patented technologies and help firms launch products, and high-status VCs strengthen both the patenting and product innovations of young firms. Corporate venture capitalists and government agencies also select patent-intensive firms but are less effective than VCs in helping ventures during the relationship because, though these partners often have impressive technical and commercial resources for innovation, their institutional logics constrain how effectively young firms can access their resources. Relative to other types of funding partners, VCs have a closer advisor relationship with the venture; greater power, influence, and access to resources; better-paced and more-motivating milestones; and better understanding of the commercialization process. Our results extend the institutional logics literature to interorganizational relationships and suggest that the choice among types of funding partners may have unanticipated effects on firms' innovation beyond the financial resources gained through the relationship.
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BFBNIB, IZUM, KILJ, NMLJ, NUK, ODKLJ, OILJ, PILJ, PNG, SAZU, UKNU, UL, UM, UPUK
This article investigates the role of corporate venturing (CV) advisory firms in fostering strategic agility in their clients, which are typically established, incumbent companies. While strategic ...agility, defined as the ability of a firm to adapt its strategic direction to create new value, is gaining prominence, the mechanisms for achieving agility through CV remain rather underexplored. Furthermore, traditional CV service providers have been categorized into “inside-out” and “outside-in” players, but a new category of service providers, i.e., the CV advisory firm, transcends these distinctions by offering integrated CV services. Hence, this paper focuses on the case study of Gellify, an international CV advisory firm supporting corporations in developing strategic agility. The results suggest the existence of four distinct CV services that nurture strategic agility, namely venture clienting, venture acquisition, venture building, and venture builder building. Each of these services influences the three key dimensions of strategic agility (i.e., resource fluidity, strategic sensitivity, and leadership unity) in distinct ways and provides different impacts on incumbent firms. This paper contributes to the understanding of how the CV services offered by advisory firms nurture strategic agility in established corporations, thus providing valuable insights into the evolving landscape of CV and strategic agility.
•Corporate venturing (CV) service providers sustain strategic agility creation for corporate firms•Four CV services nurture strategic agility : venture clienting, acquisition, building, and builder building•CV services impact resource fluidity, market sensitivity, and leadership unity, as well as the corporate firms' structure
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
•We investigate whether GVCs spur invention and innovation.•We focus on young biotech firms in Europe.•Stand-alone GVCs have no effect on invention and innovation.•GVCs increase patenting when ...syndicating with IVCs.•DVCs (TVCs) have a positive effect on invention (innovation).
This paper explores whether and how governmental venture capital investors (GVCs) spur invention and innovation in young biotech companies in Europe. To gauge invention we focus on the simple patent stock at the company level, while innovation is proxied by the citation-weighted patent stock. Our findings indicate that GVCs, as stand-alone investors, have no impact on invention and innovation. However, GVCs boost the impact of independent venture capital investors (IVCs) on both invention and innovation. We conclude that GVCs are an ineffective substitute, but an effective complement, of IVCs. We also distinguish between technology-oriented GVCs (TVCs) and development-oriented GVCs (DVCs). We find that DVCs are better at increasing firm’s inventions, and that TVCs, combined with IVCs, support innovations.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK
Equity financing in entrepreneurship primarily includes venture capital, corporate venture capital, angel investment, crowdfunding, and accelerators. We take stock of venture financing research to ...date with two main objectives: (a) to integrate, organize, and assess the large and disparate literature on venture financing; and (b) to identify key considerations relevant for the domain of venture financing moving forward. The net effect is that organizing and assessing existing research in venture financing will assist in launching meaningful, theory-driven research as existing funding models evolve and emerging funding models forge new frontiers.
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NUK, OILJ, SAZU, UKNU, UL, UM, UPUK
We analyze the funding of start-up companies across financing rounds, focusing on the dynamic interactions between angel investors and venture capitalists. Using unique data from British Columbia, ...Canada, we show that angels and venture capitalists are dynamic substitutes. This substitutes pattern applies across the performance range of companies. It is less pronounced for serial angels. An instrumental variable analysis, based on available investor tax credits, suggests that the substitutes pattern is driven by company characteristics. Overall, the evidence points to the existence of parallel streams of angel and venture capital funding, with fewer transitions between streams than is traditionally assumed.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
Productivity is a key factor that differentiates firm competitiveness. To promote productivity, the internal source, research and development expenditure, is undoubtedly a primary driver, while ...various external sources are also critical. This study examines the determinants of productivity in Chinese firms, focusing on external technological sources, especially policy-induced factors, including tariff-free imported intermediates, forced technology transfer through international joint ventures (IJVs) and production subsidies. Based on firm-customs matched data for 2001-2007, we find that the technologies embodied in imported intermediates and IJVs in technology-intensive sectors positively influence productivity. Production subsidies also have a significant and positive relationship with productivity. Overall, the above findings suggest the effectiveness of policy instruments. Further heterogeneous analyses highlight the differences in productivity effects by isolating the above factors individually in various dimensions.
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BFBNIB, NUK, PILJ, SAZU, UL, UM, UPUK
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