Abstract
In this paper we analyze the contingent benefits of receiving corporate venture capital (CVC) investment on tech ventures’ innovation outcome. First, we show that ventures receiving CVC investment have higher innovation performance in comparison to ventures that have received independent VC (IVC) investment only. Furthermore, the positive effect of having CVC investors is more pronounced for a focal tech venture’s innovation rate when the tech venture has more patents and higher alliance activity at the time the venture received its first CVC funding. We also show that tech venture can access more of the resources that a CVC can offer during favorable (or hot) market conditions, thanks to the venture’s increased bargaining power in favorable market conditions, hence further pronouncing the positive effects of CVC investment on the venture’s innovation rate. We tested our hypotheses on the biotech ventures that received venture capital funding between 1980 and 1997 and found supporting results for our hypo...
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