Round Of Investment Research Articles

Assessing the impact of seed accelerators in start-ups from emerging entrepreneurial ecosystems

This study provides new evidence regarding the significance of enrolling in a seed accelerator programme for the performance and prospects of startups. The main novelty and contributions of this work lie in siting the analysis within an emerging entrepreneurial ecosystem (EE) and exploring the impact of both the business model and technological levels of new ventures. We tested a set of six hypotheses through empirical analysis of a dataset comprising 735 startups located in Valencia (Spain), a region representing the category of an emerging, medium-sized EE. The findings revealed that within this EE, the advantages of being accelerated tended to diminish and were more marginal than expected. Furthermore, the seed accelerator profile appeared to be of little importance to the prospects and attractiveness of firms to investors. Interestingly, their technological levels were strongly correlated with higher investment but not with a higher number of employees. The expected direct relationship between funding and firm size was also confirmed. A particularly noteworthy finding was the direct relationship between a higher technological level and business-to-business (B2B) models, as well as the opposite relationship for business-to-consumer (B2C) models. These findings have several significant implications for management and policymakers, including the apparent lack of advantages for accelerated firms in closing large investment rounds and the recommendation that incubators prioritise new ventures with high technological capacity and focussing on B2B models. Finally, we highlight the profile of startups with strong prospects for attracting investment and scaling up.

Physical attractiveness, same-sex stimuli, and male venture capitalists' financial risk-taking.

Financial risk-taking is central to venture capital decision-making, which is increasingly approached from a heuristics and biases perspective. While previous research has identified entrepreneurs’ physical attractiveness as an important heuristic cue in VCs’ investment decisions, this study addresses the role of VCs’ own physical attractiveness in relation to the financial risks they take. Using a dataset for a representative sample of 341 male entrepreneur and male VC dyads in the context of stage financing, this study finds that VCs of below-average attractiveness are more sensitive to the physical attractiveness of the entrepreneur when compared to VCs of average attractiveness. Also, the nature of this effect changes from the first to the second investment round for VCs of below-average attractiveness. Combined, these findings imply that VCs’ funding decisions may be subject to mechanisms that stem from their own physical attractiveness. Theoretical implications for VC decision-making and same-sex stimuli are discussed.

An alter-centric perspective on status disparity and newcomer additions in multiparty syndicates

Status dynamics play a critical role in venture capital (VC) syndication. Prior research on multiparty syndicates has shown how status differences among current syndicate members affect how the syndicate searches for new investors in later investment rounds. However, it is unclear how potential newcomers evaluate whether or not to join a syndicate based on the degree of status disparity among current syndicate members. We adopt an alter-centric approach by examining how an existing syndicate’s status disparity affects a potential newcomer’s willingness to join. For potential newcomers, we contend that syndicate status disparity is a double-edged sword, both deterring newcomers due to low perceptions of syndicate trust while simultaneously attracting newcomers at the prospect of accessing diverse future investment opportunities. Whether the perceived costs of syndicate status disparity outweigh the perceived benefits for newcomers depends upon the degree of risk associated with the venture deal. Across two studies—a field experiment of 193 institutional investors and an archival study of 3644 multiparty syndicates—we found that newcomers are attracted to syndicate status disparity when deal risk is low but deterred from syndicate status disparity when deal risk is high. Our article highlights how newcomer additions to multiparty syndicates entail a complex interplay between features of co-investors and features of the venture deal.

Venture Capital as a New Approach to Developing Early-stage Firms in Emerging Countries;

This study aims to extend our knowledge of the new approaches to entrepreneurial finance that inspire the development of early-stage firms in developing countries. The role of entrepreneurship is well understood internationally owing to its substantial influence on new employment creation, and productivity, and a seedbed for the emergence of innovative young firms. The survival and prosperity of the HGFs are unswervingly linked to access to sustained financing during their early-stage growth, nonetheless, access to funding remains the topmost worry for young firms. Yet VC financing has a competitive edge over banks burrowing, which cannot easily substitute for VC in its absence. We developed a multi-regression model to measure the results using survey data of 61 VC companies dealing with over 327 investment rounds from 2015-2021. The study confirms that VC investment has a dramatically flourishing prominence in nurturing early-stage firms with potential growth. Our study makes three major contributions to advancing this debate: First, our finding is expected to benefit the policymakers and civil society in the practice of creating new VC policies or altering existing ones to attract increased foreign VC investment in active countries and beyond. The government’s increased funding to the VC companies might lead to higher survival rates for new innovative industries as observed in the developed. Moreover, we discover that this research arena is recognized by a paucity of theoretical and empirical research underpinning VC’s proficiency in nurturing high-growth firms and innovative entrepreneurship.

Agilent will double oligonucleotide capacity

Agilent Technologies says it will spend $725 million to double its manufacturing capacity for therapeutic nucleic acids, or oligonucleotides. The project is the latest in a round of industry investment responding to fast growth in a market that Agilent currently values at $1 billion per year. The project will add two oligonucleotide manufacturing lines at Agilent’s Frederick, Colorado, facility, where a production line announced in 2020 is expected to begin operating later this year. Agilent says shipments from the two new lines will start in 2026. Oligonucleotides are short DNA and RNA molecules that serve as the active ingredients for drugs that target cancer and cardiovascular, rare, and infectious diseases. Agilent says the expansion addresses a growing demand for double-stranded small interfering RNA and antisense RNA molecules, as well as molecules employed in gene-editing technologies. Agilent’s news comes on the heels of the purchase by BioSpring, a contract manufacturer of

Стратегічний розвиток стартапів в інноваційному середовищі

The aim of the article is a theoretical and methodological substantiation of the scientific and practical process of the strategic development of startups in the innovative environment in the current conditions of economic management. According to the results of the carried out study, it is found that the successful development of the economy of any contemporary country is directly related to the level of innovative development and access to the markets of advanced technologies. The process of generation and implementation of innovations is the basis for successful transformation into a modern knowledge-intensive and dynamically developing market economy. One of the key factors ensuring the effectiveness of this process is the creation of an innovation infrastructure, an important element of which is startups as the most operational and flexible market of participants. It is generally accepted that the evaluation of a startup is a sign of success. This indicates progressive development and attractiveness for involving financial sources. However, unlike the valuation of the State-owned companies, the process for private companies is opaque and often based on assumptions made after the announcement of late investment rounds. This approach does not allow for an objective evaluation of a startup. The shares issued at later stages are more expensive – not only because of the objective success of the company, but also because of specific preferences. The article discusses the advantages of creating startups, identifies trends in increasing innovative development and proposes long-term development of a startup at all life cycles. It is determined that the reorganization of the innovation infrastructure for supporting startups includes solving the current and strategic tasks related, first of all, to investment support for the generation of innovation. Taking into account the complexity of the structural composition of the elements involved in the processes of creation and development of innovative infrastructure to support startups, and the strategic orientedness of the tasks they solve, the development of the organizational structure and economic mechanism of interaction between startups is the basis for the development of innovation infrastructure, contributing to the effective organization of information exchange between the elements of the innovation infrastructure.

Corporate venture capital and interfirm rivalry: A competitive dynamics perspective

AbstractResearch SummaryThis study views corporate venture capital (CVC) investment as a form of inter‐firm rivalry. Adopting a competitive dynamics perspective, we argue that when a focal corporate investor invests in an entrepreneurial venture, that investment sends important competitive signals to its rivals, thereby increasing their likelihood of initiating a matching response. We theorize how three factors characterizing such investment—the amount of funding, industry relatedness between the corporate investor and the entrepreneurial venture, and the reputation of the corporate investor—can influence rivals' awareness of competitive threat, their motivation to respond, and therefore their likelihood of launching a matching counterattack. Our results demonstrate substantial support for our theoretical model.Managerial SummaryThis study views CVC investment as a form of competitive interaction, arguing that when a corporate investor participates in an investment round, it sends a competitive signal to its rival, motivating the latter to respond by also investing in CVC. Because of this counteraction, the competitive advantages of firms' CVC strategies may be temporary as rivals catch up and nullify the benefits of a CVC initiative. Thus, when planning strategy, CVC managers need to take potential rival counteractions into account and carefully assess the competitive implications of their CVC strategy, perhaps by avoiding harmful counteractions through initiatives more subtle in execution and orientation, and thus “under the radar” of rivals.

In Case You Haven't Heard…

A startup co‐founded by pop star Selena Gomez, Wondermind, is raising funds at a valuation of $100 million as it looks to capitalize on a boom in the mindfulness trend, Bloomberg Business reported Aug. 11. Tennis icon Serena Williams's venture fund, Serena Ventures, led the $5 million early‐stage investment round that was joined by Lightspeed Venture Partners and Sequoia Capital. Brent Saunders, the former chief executive officer of pharmaceutical company Allergan, also took part. Wondermind is focused on “mental fitness,” promoting routines to maintain mental health, similar to how you'd go to a gym to stay physically fit. Along with her mother, Hollywood producer Mandy Teefey, and Daniella Pierson, founder of the pop culture newsletter The Newsette, Gomez started Wondermind after the mother‐daughter duo met Pierson two years ago and quickly hit it off. Gomez disclosed in 2020 that she was diagnosed with bipolar disorder, and she has discussed her battles with anxiety and depression in interviews over the years. Teefey has also been candid about her struggle with attention‐deficit/hyperactivity disorder.

Investors including BASF Venture Capital and Inflexor Ventures agree to invest $8 M in a Series A investment round in Bellatrix Aerospace

Nursing schools need to provide students with the appropriate tools to develop competencies and resources to actualize moral courage to advance health equity and center social mission.The purpose of this study was to describe six nursing programs that exemplify a variety of ways that social mission goals are pursued in different contexts.Using a case study approach, we selected nursing schools that excelled in at least one of the following social mission domains: education program, community engagement, governance, diversity & inclusion, institutional culture & climate and research. We conducted video interviews with the administration, faculty and students.Main themes were: (1) central university/college commitment; (2) allocation of school resources; (3) faculty buy-in; (4) community partnerships; and, (5) an institutional culture of inclusion.While each school approaches social mission differently, there are commonalities across cases including a number of necessary factors for schools to advance their social mission goals.

Research on the Impact of Venture Capital Strategy on Enterprise Innovation Performance: Based on Evidence of Investment Timing and Rounds

Innovation is the first development force; thus, it is necessary to study the factors to enhance innovation ability. What type of venture capital strategy is more conducive to promoting enterprise innovation? We use the companies listed on the Growth Enterprise Market from 2009 to 2017 as samples and employ the Poisson regression method to empirically test the impact of venture capital investment timing and rounds of venture capital on entrepreneurial innovation performance. The results indicate that 1) venture capital can significantly improve firms’ innovation performance; however, compared with the early stage investment, the late-stage investment can significantly improve the firm’s innovation performance. With the increase in investment rounds, the innovation performance of enterprises is significantly improved. 2) Investment timing has a significant negative moderating effect on the relationship between investment rounds and firm innovation, that is, late-stage investment will significantly weaken the positive impact of investment rounds on firm innovation.

Does venture capital investment enhance corporate innovation? Evidence from Korea

AbstractWe examine whether venture capital (VC) investment enhances corporate innovation in Korea. Using a matched sample of 802 firms from 1998 to 2012, we find that after the first round of VC investment, VC‐backed firms are more innovative than non‐VC‐backed firms. Our results suggest that the positive influence of VC investment largely comes from the ability of VC firms to reduce information asymmetry between investors and ventures: VC funds managed by independent venture capitalists significantly enhance corporate innovation, whereas those managed by governmental venture capitalists do not. Furthermore, this positive influence becomes more pronounced where there is greater information asymmetry. Finally, we show that funds with profit‐based compensation structures are more likely to encourage corporate innovation than those with fee‐based compensation structures.

The global geography of investment in emerging technologies: the case of blockchain firms

ABSTRACT Scholars have long been interested in where new technologies and industries emerge. This regional graphic examines the emergence of one such technology: blockchain. We developed a global database of blockchain firms, as well as capturing investment rounds at the firm level, using Crunchbase, a well-accepted source of information on technology firms. We geocoded the dataset and created original network data at the city-region level to capture investment interactions. We find that blockchain firms are located in cities around the world. However, firms receiving investments are concentrated in a small number of global city-regions, with Silicon Valley, New York, Singapore, London, and Beijing accounting for half of all investments. Moreover, there appear to be supra-regional networks, suggesting that new technology firms continue to concentrate in a handful of interconnected world cities.

Virtual treatment options make a case, and private investment is responding

Problems in attracting patients to traditional addiction treatment and retaining them in care, an issue compounded by the challenges of the pandemic, have caused an explosion of interest in virtual applications for substance use prevention, treatment and recovery. Startups that for several years now have received some innovation funding from government sources are increasingly catching the eye of heavy hitters in private investment. This became clear last October when Workit Health announced a $118 million investment round that included participants such as CVS Health Ventures and the BCBS Venture Fund.

How do banks invest in fintechs? Evidence from advanced economies

Using data on a sample of 803 investment rounds in fintech companies (FTCs) held between 2008 and 2018 at the global level, where each company received investment from at least one financial institution, we investigate how banks react to digital transformation through the direct investment channel. Each round is treated as an independent event; hence, we examine 1,078 bank-FTC observations. Employing OLS regressions, we explore the determinants of deal size, both in absolute (i.e., monetary flows) and relative terms (i.e., the proportion of the total funding that the target has cumulatively received). Conversely, with probit analysis, we investigate the determinants of banks’ choices to invest in “fin-native” vs. “tech-native” FTCs and those of their decisions to use equity (i.e., capital injections) vs. debt (i.e., credit lines). We find that investments are enhanced by an FTC’s specialisation in financial rather than technological services, by the presence of other investors, and — to some extent — when the target is in a later stage of development and the bank is large. Additionally, the nature of a target depends largely (but not exclusively) on the corresponding bank’s risk-return profile, as fin-native companies and debt financing are perceived as safer than tech-native companies and equity financing, respectively. Finally, we find that a limited but non-negligible role is played by the regulatory framework, which mainly affects the choice of financing tool by prompting banks to choose equity — i.e., a bolder risk-return profile — when they face harsher competition from unlicensed lenders.

Influence of endogenous reference points on the selling decisions of retail investors

AbstractUsing trader‐level data, we examine the impact of the stock‐specific endogenous reference points, the ‘realized‐return’ and the ‘peak‐return’ of the prior round on the selling propensity in a subsequent investment round in the same asset. The selling propensity rises significantly near the endogenous reference points. The significance is greater when the holding period is relatively shorter and when the time gap between the consecutive rounds is lower, implying a recency effect. Finally, the impact is more substantial on traders holding fewer stocks. The results imply that traders' prior stock‐specific experience plays a significant role in the reference point formation.

Improving Funding Operations of Equity‐based Crowdfunding Platforms

Equity‐based crowdfunding platforms enable investors to come together to invest in startups and help lay‐investors to follow the lead of investors with good startup evaluation skills. Crowdfunding platforms often gather users’ inputs to evaluate investors and startups, but such inputs are quite noisy and often rely on past performance. Many investors with good evaluation skills do not have substantial past investment experience but still can lead investment rounds. This helps provide investment opportunities to lay‐investors who otherwise do not get to join investors with proven records. Without identifying such investors with potential, platforms lose the opportunity to put together investors to fund worthy startups and lose business. We develop a Bayesian model to address this problem and improve funding operations of equity‐based crowdfunding platforms. Specifically, the model helps platforms to better assess investors’ evaluation skills, identify lead investors for lay‐investors to follow, and increase funding opportunities on the platforms. To test the effectiveness of the proposed model, we gathered data from 319 actual investors listed on one of the largest crowdfunding platforms in the United States, picked startups randomly for investors to evaluate, and had investors evaluate startups in two ways—our approach and the conventional approach. We also discuss an extension of this Bayesian model that penalizes investors in case investors perform well by randomness. Furthermore, we used a Bayesian framework to help platforms better predict startup valuations accounting for investors’ evaluation skills.

Modelling Investment Choice Preference of Government Venture Capital Guiding Funds

The continuous development of the government venture capital guiding funds (hereinafter referred to as the “government guiding funds”) has provided financial support and development opportunities for the development of many small- and medium-sized enterprises (SMEs), and government guiding funds have been paid attention by more and more entrepreneurs and investors of SMEs. This paper takes the SMEs listed on the National Equities Exchange and Quotations (“NEEQ,” known as the New Third Board) as a research sample, systematically examines the factors that influence the selection of investment objects of government guiding funds, and studies the preference of government guiding funds from the aspects of financial characteristics and corporate governance of SMEs. The research results show that on one hand, ownership concentration, date of establishment, and asset size are significantly related to government guiding funds, while the return on equity (ROE), the asset-liability ratio, liquidity of assets, growth rate of main business income, and the operating net profit ratio failed to pass the significance test; on the other hand, operating profit ratio, investment interests, asset size, and the amount of investment of government guiding funds are significantly related, while investment rounds, date of establishment, ownership concentration, ROE, asset-liability ratio, liquidity of assets, and operating net profit ratio failed the significance test.

Fueling Spin-offs: Case Studies of University-based Technology Start-up Funding

The new technologies born from academic research can be very promising, yet they are often very early stage. University spin-off companies are uniquely positioned to tackle the risks associated with new technologies emerging from academia by developing proofs of concept, functioning prototypes, and new products. While these enterprises start from a solid research and development foundation, they face their own unique set of challenges—they are strongly anchored in the scientific and technological expertise that is typically backed by intellectual property but often lack the business experience needed to develop and market products demanded by customers. University spin-offs have access to substantial non-dilutive funding that can be utilized for advancing product development. While the relentless pursuit of these funds builds a company's credibility and improves its position for negotiating future private investment, university spin-offs would greatly benefit from an early focus on complementing their technology teams with their business teams. These new enterprises should consider pursuing private investment in parallel to utilizing sources of non-dilutive funding. Timing of private investment is extremely important to maximize the value of the opportunity, and, therefore, building relationships with investors early on and getting ready for executing an investment round can greatly increase odds for success. While there is no single path to formulate, pursue, and adapt successful financing strategies, lessons can be learned from real-life cases of university spin-offs that continue their journeys towards ultimate success.

Banks, FinTech and stock returns

This paper investigates the effect of banks' investment in FinTech firms (FTF) on stock returns. We hand-collect data on 581 investment rounds made by FTFs, within at least one European or North American bank acting as investor. Our results show that banks’ investment in fintech affect stock markets. The abnormal reaction is negative, larger for young and technology-oriented firms, and stronger in the case of multiple investments. Bank size, leverage and profitability do not moderate abnormal returns. Overall, our study suggests that bank equity investment in FTFs is an important determinant of abnormal stock returns.

Smart-lab developer Strateos raised funds

Strateos, a developer of data management and robotic systems for drug discovery, has raised $56.1 million in a series B investment round led by DCVC and Lux Capital. The company operates small-molecule and biologic-drug labs in San Diego and Menlo Park, California, where customers can remotely conduct experiments. Strateos opened the San Diego lab last year in partnership with Eli Lilly and Company, an investor in the financing round. The company was founded in 2012 as Transcriptic.