Corporate Venture Capital in the Twenty-First Century: an Integral Part of Firms' Innovation Toolkit

Abstract

AbstractThis article reviews the academic literature on corporate venture capital (CVC), that is, minority equity investments by established corporations in privately held entrepreneurial ventures. The article is organized as follow. It starts with a detailed definition of corporate venture capital, its historical background, and an extensive review of investment patterns. Next it discusses the corporate venture capital literature, with an emphasis on rigorous empirical studies published in leading academic journals. It reviews firms' objectives through the governance of their CVC programs and the relationships with the portfolio companies, and examines the interactions between CVC investment and other firm activities (e.g., alliances and M&A) as well as other entities (e.g., independent venture capital funds). The performance of the parent corporations, entrepreneurial ventures, and CVC programs is summarized next. The article concludes with directions for future research.