The financialization of corporate venture capital investment? The corporation as a venture capitalist

Abstract

Recent trends in corporate venture capital (CVC) activities have added to the size and complexity of the financial system. Intuition suggests that in a period marked by spectacularly increasing start-up valuations, the opportunity to earn large capital gains increases the importance of corporate investors’ financial motivations. Drawing on interviews with 12 Silicon Valley-based CVC units of global industrial companies, we examine if new trends in CVC investment represent a diversion from incumbents’ traditional focus on improving the competitive advantage of their core businesses. Building on the theory of the financialization of non-financial companies, we investigate the relationship between the strategic and financial motivations of CVC investing. We extend theory by distinguishing between developments at the extensive and intensive margins. We argue that the commonly applied quantitative measures capture financialization only at the extensive margin. Qualitative data indicate that the hypothesis of financialization does not hold at the intensive margin.

Harmonizing corporate venturing dimensions and its characteristics: a systematic analysis

“…The empirical research determines specific objectives either through interviews (Siegel et al 1988;Kanbach and Stubner 2016;Szalavetz and Sauvage 2023), by the existence of strategic relationships (Kang et al 2021), or by CV outcomes, including patents for strategic objectives or the return on investment (ROI) for financial objectives (Dushnitsky and Lenox 2005;Huang and Madhavan 2021). Also, the relationship between strategic objectives and different CV modes and governance forms within a single mode has been discussed in detail.…”