When does corporate venture capital add value for new ventures?

Abstract

New ventures face a trade‐off when considering corporate venture capital (CVC) funding. Corporate investors can provide complementary assets that enhance the commercialization of new venture technologies. However, tight links with a particular corporate investor has drawbacks and may constrain new ventures from accessing complementary assets from diverse sources in an open market. Taking this trade‐off into account, we explore conditions under which CVC funding is beneficial to new ventures. Using a sample of computer, semiconductor, and wireless ventures, we find that CVC funding is particularly beneficial for new ventures when they require specialized complementary assets or operate in uncertain environments. Copyright © 2011 John Wiley & Sons, Ltd.

The Impact of Venture Capital on GEM Companies’ Deviant Strategy

“…Specifically, the value-added services provided by the venture capital related to the venture enterprise strategy mainly include three kinds: 1) The guidance of strategic positioning. Venture capital institutions in a particular industry has accumulated a wealth of investment experience, then they have a profound prejudgment, the status quo and prospects of the industry, and accordingly for the start-up enterprises to provide technology, product and service development of cutting-edge information to help enterprises to develop appropriate products and markets [15] Assistance in strategic implementation. Venture capital firms have accumulated industry expertise in specific areas and help companies develop scientific operational strategies to facilitate the efficient implementation of corporate strategies [31] [35].…”

“…The existing literature shows that venture capital has a pivotal role in the growth of start-ups. Venture capital institutions can not only ease the business' capital "bottleneck" and constraints [13]; more importantly, venture capital institutions with its industry-wide long-term investment experience accumulated, to provide strategic consulting for start-up enterprises, provide strategic consulting, listing and financing and other value-added services and risk screening, internal control and other supervisory control [14] [15], thereby helping to reduce operational uncertainty and improve financial performance [14] [15] [16] and the perfection of corporate governance [17] [18] [19]. It is important to note that some scholars have tentatively analyzed the impact of venture capital intervention on the strategic choice of start-ups: some scholars believe that venture capital institutions use their reputation and network resources to promote the internationalization of strategic choice [13] [20] [21].…”

Organizational Choices and Venturing Modes: An Analysis of Corporate Venture Capital Activities in Legacy Media

“…With respect to the CVC literature dealing with a company's investment focus and its impact on corporate venturing performance, the notion of strategic fit with the parent corporation (Gompers & Lerner, 2000;Ivanov & Xie, 2010) and the concepts of the degree of relatedness (Da Gbadji, Gailly, & Schwienbacher, 2015;Yang, Narayanan, & De Carolis, 2014) and complementarities (Dushnitsky & Shaver, 2009;Park & Steensma, 2012) have been analyzed.…”

The role of venture capital in the development of the SME sector

“…In modern developed markets, such as the US and the EU market, there is a large number of venture capital funds that are willing to invest in high-risk enterprises. Because of this, companies are willing to pay 10% to 14% of the premium in the form of a discount on the assessment in order to receive money from renowned venture capital funds giving up less prominent VCs investment proposals (Park & Steensma, 2012).…”