Corporate Venture Capital Investment Practices and the Exit Puzzle

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This study analyzes the effect of corporate venture capital (CVC) investment practices on the subsequent exit outcomes of portfolio companies. Specifically, we draw upon institutional theory to examine the role of CVC investment relatedness, commitment, timing, and syndication for exiting portfolio companies through subsequent acquisitions vis-á-vis IPOs. Studying 1,093 CVC investor-investee dyads followed by a portfolio exit between 2010 and 2019, we provide empirical evidence that CVC investors are more likely to acquire their portfolio companies if they follow endo-isomorphic investment practices, while exo-isomorphic practices increase the likelihood of an exit via IPO. Our study contributes towards a better understanding of CVC units as ‘hybrid’ investors and can help both CVC units and entrepreneurial ventures to anticipate exit outcomes that result from specific investment practices.