Abstract
PurposeInstitutional venture capitalists (IVCs) and corporate venture capitalists (CVCs) deploy analogous activities but adopt different approaches to financing innovation and value creation for venture-backed firms. Thus, this paper aims to investigate their potential ambidexterity as a result of knowledge management (KM) strategies and processes.Design/methodology/approachAfter a focused literature review showing evidence of KM behaviors as a source of potential ambidexterity for IVCs and CVCs, descriptive, inferential and discriminant analyses on the 15 most active IVCs and CVCs in the world in 2019 are presented. Correlations between numbers of deals, prevailing entrepreneurial intensity and potential ambidexterity are investigated.FindingsSpecific differences are analyzed from a KM perspective, revealing that the number/percentage of operations per round can result as a misleading criterion of knowledge accumulation. Finally, a theoretical model for ambidexterity for venture capitalists is developed.Originality/valueThe study shows that IVCs act with greater investment capacity because of their organizational structure and purpose and focus on financial goals; moreover, they are ambidextrous, although their exploration may more frequently entail exploitation than “real” exploration. CVCs tend to invest in sectors related to their core business, coherent with their strategic purpose and more oriented with KM strategies for accumulating intellectual capital.
Highlights
Scholars have identified at least four waves of institutional venture capital (IVC) and corporate venture capital (CVC) (Dushnitsky, 2012): seed (1960–1970), consolidation (1980), boom (1990–2000) and rethinking
IVC is organized as a limited liability partnership (LLP), raising funds to invest in start-ups, whereas CVC can assume various configurations from legal and organizational points of view: the CVC team is based in a business unit, and the parent corporation is the exclusive source of capital, providing support for Research & Development (R&D) and other functions of the backed firm
Using an approach used in similar research (Rossi et al, 2019a, 2019b), the entrepreneurial intensity of VC operations can be proxied by the product between the round weight and the invested amount: in this comparison, IVCs’ and CVCs’ same linear evolution through j j PAGE 2442 JOURNAL OF KNOWLEDGE MANAGEMENT VOL. 24 NO. 10 2020
Summary
Scholars have identified at least four waves of institutional venture capital (IVC) and corporate venture capital (CVC) (Dushnitsky, 2012): seed (1960–1970), consolidation (1980), boom (1990–2000) and rethinking (present). VC generally involves medium- to long-term investment in exchange for an equity stake in a company (Dagogo and Ollor, 2009) as a professionally managed fund of equity capital (Hisrich and Peters, 1998) In this respect, IVCs are independent pools of capital focused on equity or equity-linked investments in high-growth companies (Gompers and Lerner, 2001; Lerner, 2009; Rossi, 2015). Finance for innovative firms involves a large number of equity investors from public and private funds The authors conclude that IVCs and CVCs have different, complementary value-added profiles, in terms of knowledge assets: young firms can benefit from attracting both types of investors. Variance in CVC performance may be best explained by differences in the underlying objectives of the programs” (p. 754)
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