VC Syndicates Research Articles

Watching What Serial Entrepreneurs and the VC Syndicates are Doing Today to Discover Innovation Investments Tomorrow

Watching What Serial Entrepreneurs and the VC Syndicates are Doing Today to Discover Innovation Investments Tomorrow

Resources access needs and capabilities as mediators of the relationship between VC firm size and syndication

Drawing from the resource-based view and transaction costs economics, we develop a theoretical framework to explain why small and large firms face different levels of resource access needs and resource access capabilities, which mediate the relationship between firm size and hybrid governance. Employing a sample of 317 venture capital firms, drawn across six European countries, we empirically assess our framework in the context of venture capital syndication. We estimate a path model using structural equation modeling and find, consistent with our theoretical framework, mediating effects of different types of resource access needs and resource access capabilities between VC firm size and syndication frequency. These findings advance the small business literature by highlighting the trade-offs that size imposes on firms that seek to manage their access to external resources through hybrid governance strategies.

Financial Contracting with Strategic Investors: Evidence from Corporate Venture Capital Backed IPOs

We analyze financial contracting in start-ups backed by corporate venture capitalists (CVCs). CVCs' strategic goals can economically hurt or benefit the start-ups, depending on product market relationships between start-ups and CVC parents. Empirically, start-ups receive funding from both complementary and competitive CVC parents. However, start-up insiders commonly limit the influence of competitive CVCs, awarding them lower board power, while retaining higher board representation for themselves. Second, lead CVCs receive lower board representation, indicating heightened concerns about their greater influence in start-ups' early stages. Finally, start-ups extract higher valuations from competitive CVCs, reflecting greater moral hazard problems. Overall, CVC strategic objectives affect their early inclusion in VC syndicates, their control rights and share pricing.

External Venturing for Strategic Renewal: Towards Understanding Who Makes Corporate Venture Capital Investments and Why

This study examines the conditions under which firms participate in corporate venture capital (CVC), an important mode of exploration and strategic renewal. In developing our theory, we integrate insights from our field research with the resource-based view of interfirm collaboration and emphasize the strategic flexibility inherent in CVC relationships. We use longitudinal data on 477 firms from the 1990 Fortune 500 list for the period 1990-2000 to test our hypotheses. We find that firms in industries with rapid technological change, high competitive intensity and weak appropriability engage in greater CVC activity. We also show that firms that possess strong technological and marketing resources and resources developed from prior venturing experience engage in greater CVC activity. Finally, we find that these firm resources moderate the influence of the observed industry effects. Our findings suggest the exploration of new competences involves the exploitation of established resources and capabilities. These results contribute to an understanding of the antecedents of CVC and have implications for research into corporate entrepreneurship, interorganizational relationship formation, and VC syndication networks.