Round Of Investment Research Articles

Common Ownership and Startup Growth

Many startups are commonly-held by the same venture capital (VC) investors. We exploit the staggered introduction of liability exemptions when investors hold stakes in conflicting business opportunities as a shock to common ownership. We find increases in common ownership and directors serving on rivals' boards after the law changes. Despite the potential for rent-extraction, commonly-held startups benefit by raising more capital through more investment rounds. Moreover, they are less likely to fail and exit more successfully through IPOs or acquisitions by another commonly-held startup. These successful startup outcomes are linked to VC directors serving on other startup boards.

Keys to success in investment rounds by immigrant entrepreneurs in Silicon Valley

This study presents an updated diagnosis of the SV ecosystem itself and offers an insight into the entrepreneurial mobility trends prospects and expectations of the growing number of start-ups launched by immigrant entrepreneurs arriving in SV. The purpose is to determine and rank the attributes most valued by investors when assessing projects and start-ups founded by immigrant entrepreneurs. The model of analysis composed by three hypotheses leads to a series of findings about the profile and expectations of the immigrant entrepreneurs, and reveals remarkable hints and key targets to be met by immigrant entrepreneurs in SV in order to successfully close investment rounds in a hypercompetitive environment. The study discloses the low impact of the founder’s profile as a driver of external investment. A key conclusion states that Venture Capitalists and Business Angels in the top-ranked entrepreneurial ecosystem are primarily led by factors linked to the competitive environment and the product development process, along with the traditional performance indicators: revenue and profitability.

Fostering digital entrepreneurship from startup to scaleup: The role of venture capital funds and angel groups

Digital entrepreneurship highly relies on external sources of financing to foster growth. This study aims at investigating how angel groups and venture capital (VC) funds affect growth of digital new ventures in their startup and scaleup phase. To address this aim, we analyzed 372 investment rounds regarding 256 Italian–based new ventures. The key findings are fourfold. First, VC funds positively affect the growth of digital new ventures. Second, digital scaleups, in line with the overall sample of digital new ventures, show a linear path of growth positively correlated with VC funding. Third, the relationship between funding received and growth in digital startups follows an inverted U–shape – with the optimal level within our sample set at 300,000$. Finally, no evidence emerges on the angel groups contribution to the growth of digital new ventures in both startup and scaleup phase. These findings are hence discussed in the light of extant literature on venture financing as well as entrepreneurial bias literature, to provide insight for both researchers and practitioners in digital entrepreneurship.

Performance of Firms with Withdrawal of Venture Capital Investment Ties

This paper examines the performance consequences for venture capital-backed (VC-backed) firms when one of their existing VCs withdraws from the investment syndication in the follow-on round. After controlling for the endogeneity of VC withdrawal of follow-on investment, we find that such event decreases the amount of follow-on investment by about 60% and adversely influences the quality of VCs who join the syndication in the follow-on round of investment. The negative signal of VC withdrawal increases information asymmetry, thereby increasing adverse selection risk for follow-on VCs. General-stage VCs and high-status VCs that withdraw send a stronger negative signal compared with VCs specializing in early-stage investing and low-status VCs. Our results show how the dynamics of VC syndication contribute to the valuation of new firms.

A bountiful year for biotech start-ups

It was another banner year for biotech company creation; dozens of new firms made their debuts with considerable cash. C&EN reviewed 50 drug-discovery-focused start-ups—a selection of which are highlighted here—that this year secured their series A financing, the first significant investment round. We found that a hefty portion were focused on three therapeutic areas: oncology, autoimmune diseases, and neurological disorders. This year’s class of venture-backed firms was also clustered around a few technology trends, including next-generation cellular therapies, new approaches to gene therapy, small molecules that directly or indirectly inhibit RNA, and small molecules that bind previously inaccessible proteins. And with 70% of the companies launching with at least $40 million in the bank, these new technologies have the support needed to yield actual drug candidates.

BASF invests in 3-D printing again

BASF Venture Capital is leading a series A investment round in the three-dimensional printing start-up Essentium. Based in College Station, Texas, Essentium is developing fused-filament fabrication technology to make parts stronger and faster than other filament-based approaches. The two firms will also collaborate technologically. BASF has been on the offensive in 3-D printing lately. It just partnered with San Francisco-based start-up Origin and invested in Prismlab, a Shanghai-based 3-D printing company.

Impact on Enhancing Livelihoods Opportunities in (MGNREGS) in Annagramam Block, Cuddalore District, Tamil Nadu

The MGNREGS 2005 offered some basic employment for marginalized groups; it did not provide substantial help to the most vulnerable. However, there was some evidence of small but significant shifts in labour relations. Higher wages, more opportunities for work, better implementation and a greater recognition of the care giving responsibilities of women will be required for this policy to fully meet its goals. , irregularities are usually reported when money is involved and the transaction is between officials who have the power to control over the Scheme, and the poor unemployed labourer who would be willing to accept whatever is due to them. However, if the Scheme is implemented efficiently and effectively, it ensures the following outcomes namely: (i), that the employment guarantee would not merely provide relief at the times of distress, it would also be a move towards long-term drought and flood-proofing of Indian agriculture; (ii), this would be a more effective instrument for reducing poverty because the impact of growth on poverty is higher in areas where social infrastructure is more developed; (iv) the number of people depending on the Scheme would steadily decline over time. As the conditions of their farms improves, people will no longer to look for work under MGNREGS; (v) the expenditure incurred on the employment guarantee would be non-inflationary because it will spur agricultural growth upon whose foundation a whole range of sustainable livelihoods could be built; and (Vi) by fuelling successive rounds of private investment, it will also set up a multiplier of secondary employment Opportunities. Hence, the present study is geared towards an in-depth impact of Enhancing Livelihoods Opportunities in MGNREGS.

Necrotecture: Lifeless Dwellings and London's Super‐Rich

AbstractThis article problematizes the relationship between the global super‐rich and processes of property development that have generated large volumes of underused residential space. Evidence is presented to show that much of London's new skyline is underused or lies entirely empty, so that one interpretation of this new landscape of super‐prime residential development is that it is a kind of dead residential space or necrotecture. These relatively lifeless spaces can be interpreted as the particularly wasteful result of continuing rounds of international capital investment in the built environment and the overconsumption of housing and other resources by the super‐rich. Necrotectural forms, seen in new towers and spectacular homes, appear to index a massive misdirection of development capacity, even as the city experiences a massive social crisis that continues to be played out in the wider housing market.

Economic effects in the UK periphery from unconventional gas development: Evidence from Wales

The paper examines the potential regional economic benefits of the development of unconventional gas. Wales (UK) represents an interesting lens through which to examine the expected effects of unconventional gas developments. In spite of significant resource endowments the region has found it difficult to internalise the economic benefits from prior energy developments. We examine whether possible commercial exploitation of unconventional gas in Wales will be any different from recent rounds of resource and energy investment. We address the challenges for resource peripheries in embedding economic activity linked to unconventional gas and show that there are dangers in generalising economic impact evidence from other states.

SOLIDpower adds new strategic investor

Italian-based solid oxide fuel cell system manufacturer SOLIDpower has closed an investment round with a new strategic investor, raising €40 million (US$46 million) to fund the growth of its breakthrough technology and products in the mass market.

Syndication in Venture Capital Investment in India: An Empirical Study

Indian economy witnessed high inflow of capital for start-ups in current fiscal year through venture capital (VC) investment. From different Indian VC deals, it is evident that VC investors prefer to invest jointly. In other words, joint investment or co-investment or syndication is a common trend in Indian VC industry. VCs adopt this strategy to minimise their future uncertainties as a part of the control mechanism. In this study, an attempt is made to find out different determinants of this syndication strategy. The samples taken in this study are retrieved from Venture Intelligence database for the period 2005–2014. The data are analysed through linear regression and binomial logistic regression. Two empirical models have been developed. The derived models validate different control variables and deal with specific characteristics to comprehend the rationale of syndication mechanism. The findings of the study indicate that the past experience and the number of industry exposure of a VC in IT and ITES industry are the major predictors for a syndication decision. Subsequently, the precautionary investment attributes like number of investment round, stage funding, etc. draw the interest of potential co-investors in a syndicated deal. Syndication mechanism benefits the VC investors through sharing of risk of investment in a start-up and preparing them for a successful exit. Extant literature supports the results as Indian VC investors prefer to share the risk profile of a start-up business and adopt different risk diversion mechanisms to attract co-investors in the deal. Furthermore, the joint investment by investors drag more funding amount and also create more human capital for efficient management of the investment in VC-backed portfolio.

Zoona mobile money: investing for impact (cases A and B)

Subject area Impact investing, Social enterprise. Study level/applicability MBA, EMBA, Executive Education. Case overview Zoona mobile money: investing for impact details a slightly altered version of the real events that occurred in late 2011 with the series A round of investment in Zoona, a mobile money business in Zambia. The focus is on the decisions that have to be made by the management team of a socially innovative tech start-up (Zoona) providing mobile money and financial services to previously unbanked consumers in Zambia. Expected learning outcomes By the end of this case, the student should be able to: understand the basics of term sheets and be able to perform a high level analysis and comparison of two distinct term sheets; identify investor objectives, ultimately recognising the general differences between private equity and venture capital investors; identify and weigh the costs and benefits of term sheets, as well as identify negotiating points and necessary trade-offs in the investment process; and identify and understand the “soft” benefits of investors and weigh these in relation to a term sheet analysis. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes. Subject code CSS 1: Accounting and Finance.

Iterum raises funds for new antibiotic

The biotech firm Iterum Therapeutics has raised $65 million in a series B investment round. The cash will help the company complete a Phase III clinical trial of sulopenem, an antibiotic it is developing to treat Gram-negative multi-drug-resistant infections. Iterum was founded in 2015 to license sulopenem from its discoverer, Pfizer. It plans to file a New Drug Application with FDA by the end of 2019.

Do Venture Capital Firms Play as Supportive Mentors or Free-riders? Evidence from China

This paper aims to investigate whether Venture Capital Firms in China play as active investors, who seize to provide the funded entrepreneurial firms monitoring assistance and value-adding service for the performance enhancement, or just act as passive investors, who care little about the growth of the funded firms but the opportunity of freeriding on the IPO process to gain fast and huge economic rents. Utilizing the panel data of listed companies on the Chinese SME Board, this paper employs the PSM methodology and the panel regression models with random effect to control the sample selection bias, and disentangle VC firm’s ex-ante screening effect from the ex-post effect. The analysis reveals that Venture Capital firms are able to select the entrepreneurial firms with superior performance before the first round of VC investment, but fail to enhance the development of funded ventures after the involvement. Although the venture backed firms present the performance superiority over the non-venture backed peers overall, this difference is just attributed to VC firm’s ex-ante screening effects. VC firms do not demonstrate the ex-post value-adding effect, rather to some extent they even exert hampering effect on the performance of funded firms after the investment was made.

Measuring the Spillovers of Venture Capital

We provide the first measurement of knowledge spillovers from venture capital-financed companies onto the patenting activities of other companies. On average, these spillovers are nine times larger than those generated by the R&D investment of established companies. Spillover effects are larger in complex product industries than in discrete product industries. Start-ups with experienced inventors holding a patent at the time of receiving the first round of investment produce the largest spillovers, indicating that venture capital fosters the commercialization of technologies. Methodologically, we contribute by developing a novel definition of the spillover pool, combining citation-based and technological proximity-based approaches.

Snapdragon gets new lab and CEO

Snapdragon Chemistry, a developer of continuous flow chemistry methods for manufacturing, is expanding. The company and its partner Zaiput Flow Technologies, which develops flow chemistry equipment, are in new labs at the same Cambridge, Mass., location. Snapdragon also has completed an investment round and will expand in areas including process analytical technologies and computational modeling. At the same time, the company is recruiting more scientists and engineers. And Matthew Bio, who was hired as chief scientific officer in September 2015, has been named president and CEO. He succeeds cofounder and MIT chemistry professor Timothy Jamison (see page 4), who continues to serve as chairman.

Exploring the Idea of the Atlanta Capital Growth Fund: Equity Crowdfunding as One Component of the New Atlanta Private Securities Exchange

Capital investments in innovation made by private firms causes economic growth. The economic growth comes from the creation of new future markets, not productivity improvements in existing markets. The new products in future markets that are created by innovation create new flows of income and profits, which did not exist in the prior period of time. To the extent that economic growth occurs at all, an iffy proposition given the risk of financial failure, it is enhanced by the idea that capital gains are reinvested in subsequent rounds of technology innovation.The goal of the Atlanta Capital Growth Fund is to create a new private sector capital market mechanism that focuses on making the initial rounds of capital investments in Atlanta’s technology firms. And, then, acting as the mechanism to reinvest the first round profits in subsequent rounds of investments in technological innovation.The fund must have a laser focus on making investments in technology firms in Atlanta that are engaged in the process of technology innovation.This article explains how the Atlanta Capital Growth Fund acts like a building block for a bigger idea of the Atlanta Private Securities Exchange, how investments in technology are linked to regional economic growth, and offers insights into how such a fund could be created and managed.

Financing the UK power sector: Is the money available?

The UK power generation sector faces a major new round of investment: the coincidence of asset retiring and ambitious goals for decarbonisation is not unique, but is particularly acute in the UK. The UK government has put in place a raft of new policies that seek to promote new, low carbon investment and ensure security of supply. The traditional channel for financing the sector has been through large utility companies, but this now looks challenging for various reasons. The UK therefore offers an interesting case study on several counts; the scale of the challenge, effectiveness of new policies, and the availability of alternative finance. We find that the link between the finance sector and the electricity sector is not ‘broken’, but the flow of money to the sector is threatened by the current weakness of the utilities’ business model. This paper compares estimates of the scale of investment required in the UK with historical investment rates. It summarises contemporary finance industry views of conditions and trends, and potential policy interventions that might be needed to bridge the investment gap. The potential for channelling institutional investor funds directly into energy assets is reviewed.

A socioecological fix to capitalist crisis and climate change? The possibilities and limits of renewable energy

Many have argued that the burning of fossil fuels is an essential component of the socionatural metabolism of capitalism as we know it, and that the anthropogenic climate change it is causing may finally bring about capitalism’s end. In this paper, I explore the potential for, instead, a societal shift towards renewable energy sources as the dominant components of global energy supplies to provide a socioecological ‘fix’ to current forms of crisis. In so doing, I develop a notion of an integrated socioecological fix that combines the central elements of Harvey’s ‘spatial fix’ and of neoliberal environmental ‘fixes’ that maintain accumulation by enrolling new elements of nonhuman nature into circuits of capital. I argue, first, that the capital intensiveness and spatial extensiveness of any such transition could provide a global-scale, if temporary, socioecological fix to capitalist crisis tendencies; and, second, that the creation of global scale geographies of renewable energy production, distribution, and consumption would necessarily involve powerful new rounds of investment in, and claims on, rural areas. These impacts would likely fall disproportionately on rural areas, where land values are lowest and existing users often have less power and fewer formal land rights.

Venture capital and the investment curve of young high-tech companies

We explore how and when venture capital (VC) alleviates the financial constraints of portfolio companies. Using a sample comprising 128 VC-backed companies and 233 non-VC-backed companies identified by propensity score matching, we estimate an error-correction model by accounting for the fact that the investment curve may be U shaped because of capital market imperfections. Our findings show that VC leads the investment curve to flatten in portfolio companies, which indicates an alleviation of financial constraints. This effect, however, is economically and statistically significant only after companies receive a follow-on round of VC financing. Because follow-on rounds, on average, do not involve larger amounts invested but have stronger informative content than initial rounds of investment, we interpret this result to indicate the importance of VC certification for the alleviation of financial constraints in portfolio companies. Evidence regarding the access to credit by VC-backed companies confirms this interpretation of the results.