Venture Capital Investment Research Articles

Venture Capital Investment and Growth of Small and Medium Enterprises (SMES) In Bayelsa State, Nigeria

The paper explored the impact of venture funding on the growth of Small and Medium Enterprises (SMEs) in Bayelsa State, Nigeria. Specifically, it investigates the effects of different venture capital financing methods, the cost of venture capital, and venture capital management support on sales growth within the SME sector. Using a survey research design, data was collected from 300 registered SMEs in Bayelsa State. Primary data was gathered through questionnaire instruments and analyzed using descriptive and inferential statistics. The findings, revealed through regression analysis, indicate that capital financing positively affects SMEs' sales growth, while the cost of capital also exerts a positive influence on sales growth. However, management support exhibits a negative effect on sales growth within SMEs. These results underscore the significance of venture capital financing mechanisms in fostering the growth of SMEs in Bayelsa State, Nigeria, while also highlighting potential areas for improvement in venture capital management practices to better support SME development.

Gold or Green Finger: Government Influence in Venture Capital Investments and Green Innovations

Gold or Green Finger: Government Influence in Venture Capital Investments and Green Innovations

Government Intervention in Venture Capital Investment in China

Government Intervention in Venture Capital Investment in China

Profit first, environmental impact second? Investigating hybrid institutional logics in venture capital investment approaches

Profit first, environmental impact second? Investigating hybrid institutional logics in venture capital investment approaches

When Do Corporate Venture Capital Investments Drive Product and Business Model Innovations?

When Do Corporate Venture Capital Investments Drive Product and Business Model Innovations?

The uneven geography of venture capital investment in China

The uneven geography of venture capital investment in China

Where to invest? Effects of technological capabilities on corporate venture capital investments

AbstractResearch SummaryWe investigate why a corporate investor makes more corporate venture capital (CVC) investments in certain areas than in others. Focusing on firms' different technological capabilities across distinct technology domains, we argue that a corporate investor's technological capabilities in a given domain affect its likelihood of investing in (1) ventures within the domain in an inverted U‐shaped manner and (2) ventures operating in other technologically complementary domains in a positive manner. We further claim that these two suggested relationships between technological capabilities and the likelihood of CVC investments are shaped by the technology growth rate of the focal domain. We test these arguments in the US medical sector, where incumbent firms are active in CVC investments as a means to acquire external knowledge.Managerial SummaryWe argue that firms exhibit different patterns in their choice of CVC investment areas based on their technological capabilities within a given technology domain. Our findings in the US medical sector indicate that firms are most likely to invest in ventures within domains where their technological capabilities are moderate—neither too weak nor too strong. This suggests that CVC investments serve gap‐filling purposes for technology intermediates. Moreover, corporate investors tend to invest in ventures within domains that are technologically complementary to their areas of strength. However, when a given domain experiences rapid growth, technology leaders in that domain shift their CVC investment focus from complementary areas to that domain to maintain their leading position.

Private Capital Markets Insights 2024: The Return of Warrants to Mezzanine Debt

Despite the prevailing focus on the public markets, private companies represent approximately half of the world economy, if not more. This is a descriptive article presenting a summary of data and results from the 2024 Private Capital Markets Report, which is the product of the annual private capital markets survey. The annual survey was launched in 2009 and examines the behavior and trends of senior lenders, asset-based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately-held businesses, investment bankers, business brokers, limited partners, and business appraisers. Most of the survey panelists are based in the United States of America, but this is not a requirement. The data set also includes many panelists outside of the U.S. There was a total of 1,143 respondents represented in the 2024 survey. An empirical result of this article is that we test the theory that the recent return of warrants to mezzanine deals is associated with a higher interest rate environment. We find evidence supporting that association. These results may be helpful for academics and practitioners forecasting mezzanine activity and deal terms.

Driving Innovation and Economic Development: The Role of Business Incubators in Agri-Tech Start-Up Ecosystems

"The research delved into the crucial role of Business Incubators (BIs) in fostering the success of start-ups, focusing specifically on the burgeoning Agri-tech sector. Through a blend of primary data collected from Agri-tech start-ups with the help of a well-structured questionnaire and secondary data sourced from governmental departments, a comprehensive analysis was conducted to assess the impact of incubation services on start-up success. The findings underscored the significant growth in job creation within India’s start-up ecosystem, particularly attributed to initiatives like Startup India. The data highlighted the substantial contribution of start-ups to employment generation and economic advancement. Additionally, the upward trend in venture capital investment in the agritech sector emphasized the industry’s potential for growth and innovation. The study revealed a significant correlation between incubation services and start-up success. Services such as access to funding, mentorship, and legal support emerged as critical factors in driving start-up success."

Unraveling the puzzling risk–return relationship: Distinctive roles of government involvement in venture capital investment

AbstractResearch SummaryGovernment involvement plays a significant role in fostering entrepreneurship. We examine how government involvement in venture capital (VC) investments shapes the decoupling between risk‐taking and investment returns. We distinguish government involvement through state ownership (GVC) and personal political connections (connected VC). We theorize that government involvement through GVC is associated with the downside risk–return paradox, that is, concurrent higher risk‐taking and lower‐than‐expected returns. In contrast, government involvement through connected VCs is linked to the upside risk–return paradox, that is, concurrent lower risk‐taking and higher‐than‐expected returns. Our theoretical predictions receive general support from analyses using longitudinal data from VC firms in China. Our study sheds light on the heterogeneity in the decoupling between risk and return and the underlying mechanisms through which governments influence entrepreneurship.Managerial SummaryGovernments often seek to promote entrepreneurship; yet, their involvement in start‐ups tends to deviate from the conventional wisdom of a positive risk–return association. Government‐owned venture capital (VC) firms tend to take greater risks and invest in earlier‐stage start‐ups, but yield lower returns from their investments. Conversely, VC firms that have personal ties to government officials tend to take lower risks and prefer later‐stage start‐ups, yet achieve higher returns. These intriguing findings reveal the complexities of government participation in entrepreneurial activities and offer valuable insights for policy formulation. In addition, our findings highlight the importance for entrepreneurs to recognize diverse goals and resources in government involvement. Considering this when seeking external financing is helpful in positioning start‐ups for growth and success.

Some aspects of state support of innovation processes in the region

The development of innovative activity of economicentities is one of the main objectives of the state policy.State instruments for support and development ofinnovation activity should provide support at all stagesof the innovation life cycle, from idea generation tosuccessful commercialisation of innovative products, andthe maximum effect will be achieved only taking intoaccount the integration of all participants of theinnovation process - from scientists and entrepreneursinnovatorsto venture funds and innovative enterprises.The innovation economy, based on scientific knowledgeand intellectual potential, is able to ensure the expandedreproduction of knowledge-intensive gross product ofboth the region and the country as a whole. The development of innovation processes is impossiblewithout the generation of new ideas, knowledge, projectinitiation at the initial stages of the innovation cycle, andwithout the use of venture capital investments at the finalstages. This problem is most difficult to solve in theregions, due to significant differences in their socioeconomicdevelopment, level of competence of scientificschools, sectoral specifics, level of concentration ofindustrial potential, including due to insufficientjustification of the directions of further development ofregions - innovation leaders. In order to support subprocessesrelated to resource provision, regionalauthorities can, on the basis of budgetary resources, forminnovation infrastructure institutions, such as: businessincubators, business accelerators, seed funds,technoparks, etc.; finance various innovation projects;invest in the development of human and intellectualcapital - in education, for training personnel ininnovation management, breakthrough scientifictechnologies, in the part of personnel training of thehighest level. At the same time, we need a promising model of longterminnovation development, which implies a gradualtransition from state to market-based instruments ofdevelopment and support of innovation activity,including innovation infrastructure functioning onmarket conditions.

Geography, creative workforce and access to venture capital

PurposeThe purpose of this study is to investigate how proximity to metropolitan areas and local creative talent impact a company’s access to venture capital (VC). We analyze the interplay between these factors and test our hypotheses using USA county data.Design/methodology/approachThis empirical study uses multivariate regression analyses to analyze VC investment distribution across the USA at the county level between the years 1990–2011.FindingsOur findings suggest that an increase in the local creative workforce correlates with higher levels of VC funding, regardless of metro location, but has a more significant impact in metro areas, indicating the complementary nature of these factors. Furthermore, the tech industry benefits more from the local creative workforce and is less sensitive to geographic location. Our results suggest that non-metro locations with a rich local creative culture can be as effective in attracting VC as metro locations with a mediocre local creative culture. This study contributes to our understanding of the optimal geographic location for companies seeking VC.Research limitations/implicationsOne of the limitations of our research is the research timeline. Since “creative class” was not measured by the U.S. Department of Agriculture (USDA) after 2011, we cannot analyze the recent effects of creative class on VC. However, given the fact that technology-related industries increasingly dominated the VC industry in recent years, our results on tech-related industries can shed light on the future expectations of the creative class in the VC industry moving forward.Practical implicationsSome companies might find it advantageous to locate outside metro areas where the creative workforce is more abundant and accessible. Our results support this trend by demonstrating that companies must consider the tradeoff between these two factors and recognize that locating in metro areas may not always be the optimal choice for every company. A tradeoff may exist between location and the cost of accessing creative talent.Social implicationsOur results suggest that non-metro locations with a rich local creative culture can be as effective in attracting VC as metro locations with a mediocre local creative culture.Originality/valueThe existing literature emphasizes the importance of studying various factors that can help distribute VC and entrepreneurial activities across the country instead of just being concentrated in specific areas like metro regions. Although previous studies have examined broader institutional and country-level factors, local creative culture has not been considered in the context of its impact on the geographical distribution of VC. Our research highlights creative culture as a new local factor that affects VC distribution among USA counties.

Global Trends in Electric Vehicle Battery Efficiency and Impact on Sustainable Grid

Over the past decade, transportation electrification has emerged as a pivotal focus of the article. Electric vehicles (EVs) have progressively gained traction in the market, displacing conventional internal combustion engine vehicles. This surge in EV popularity has led to a corresponding increase in the number of charging stations, thereby significantly influencing the power grid (PG). Various charging strategies and grid integration approaches are being devised to mitigate the potential negative impacts of EV charging while optimizing the advantages of integrating EVs with the grid. This paper provides a comprehensive overview of the current state of the EV market, standards, charging infrastructure, and the PG’s response to the impact of EV charging. The article provides a comprehensive assessment of how forthcoming advancements in EV technology, including connected vehicles, autonomous driving, and shared mobility, will intricately influence the integration of EVs with the PG. Ultimately, the article concludes by meticulously analyzing and summarizing both the challenges and recommendations pertinent to the prospective expansion of EV charging infrastructure and grid integration. The proliferation of venture capital investments in nascent start-up ventures specializing in EV and battery technologies has experienced a pronounced surge, reaching an impressive sum of nearly USD 2.1 billion in 2022. This notable increase represents a substantial uptick of 30% compared to the figures recorded in 2021. Furthermore, these investments have been directed towards two key areas: advancements in battery technology and the acquisition of critical minerals. This discernible shift in investment trends underscores the growing recognition of the strategic importance and potential profitability associated with innovations in EV and battery technologies. In 2022, global expenditures on EVs surpassed USD 425 billion, marking a substantial 50% increase compared to the previous year, 2021. Remarkably, a mere 10% of these expenditures can be attributed to governmental support, with the bulk stemming from consumer investments.

Theoretical and methodological issues of venture capital investment

Theoretical and methodological issues of venture capital investment

Employment Protection and Venture Capital Investment: The Impact of Wrongful Discharge Laws

Wrongful discharge laws (WDLs) provide limits to the employment-at-will doctrine, and thus impair operating flexibility, increasing expected financial distress costs by making it costly to fire employees. This impairment is detrimental to start-ups, leading to a decline in venture capital (VC) investment. Using a difference-in-differences framework enabled by the staggered adoption of WDLs across the U.S. states, we show VC investment declines after a state adopts the good faith exception (the strongest form of WDL). This decline is most pronounced in sectors with high labor dependency. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.01936 .

Attracting Foreign Venture Capital Investment: The Institutions that Matter Most for Emerging Economies

This study explores the critical institutions and challenges influencing the attraction of international venture capital (VC) investment in emerging economies. By examining governance indicators such as "Voice and Accountability" and "The Rule of Law," the research highlights the importance of strong democratic institutions and robust legal frameworks in creating an attractive investment environment. It also identifies the complexities of regulatory frameworks, political stability, and corruption control in this context. The findings suggest that while effective governance fosters VC investment, over-reliance on government assistance can be counterproductive. The study emphasizes the need for collaboration among governments, regulatory bodies, and local organizations to create an investor-friendly climate, unlocking the potential for innovation and economic growth in emerging markets. Further research is recommended to understand the nuanced interactions between these factors and VC investments across diverse settings.

AI Health Agents: Pathway2vec, ReflectE, Category Theory, and Longevity

Health Agents are introduced as the concept of a personalized AI health advisor overlay for continuous health monitoring (e.g. 1000x/minute) medical-grade smartwatches and wearables for “healthcare by app” instead of “sickcare by appointment.” Individuals can customize the level of detail in the information they view. Health Agents “speak” natural language to humans and formal language to the computational infrastructure, possibly outputting the mathematics of personalized homeostatic health as part of their reinforcement learning agent behavior. As an AI health interface, the agent facilitates the management of precision medicine as a service. Healthy longevity is a high-profile area characterized by the increasing acceptance of medical intervention, longevity biotech venture capital investment, and global priority as 2 billion people will be over 65 in 2050. Aging hallmarks, biomarkers, and clocks provide a quantitative measure for intervention. Some of the leading interventions include metformin, rapamycin, spermidine, NAD+/sirtuins, alpha-ketoglutarate, and taurine. AI-driven digital biology, longevity medicine, and Web3 personalized healthcare come together in the idea of Health Agents. This Web3 genAI tool for automated health management, specifically via digital-biological twins and pathway2vec approaches, demonstrates human-AI intelligence amplification and works towards healthy longevity for global well-being.

Determinants on the Successful Investment of Venture Capital

A successful venture capital investment means investors put money into projects or enterprises with high risks but potentially high returns. Academic staffs have been calling for further research on relevant information about venture capital, but there is no specific research about the determined factors of successful venture capital investment in the relevant literature. This paper may make you more aware of the influencing factors of venture capital, so as to help you make more comprehensive investment decisions or inspire you to conduct in-depth research in related fields. This paper finds the conclusion mainly through searching the relevant literature on venture capital and comparing it to the investment examples of individual companies. By analyzing the advantages of investors and the positive impact to the company, the paper continuously compares and evaluate and finally find out the three determined factors that have the greatest impact on venture capital investment. These are management team, valuation and deal structure respectively. Venture capital investment is an important way for small companies to further expand their scale, and it also reflects the changing trend of the world economy to a certain extent.

An Evaluation of the Startup Valuation Methods

As societal interest and enthusiasm for venture capitals remains stable and strong currently, the valuation methods play a more and more important role in assisting the venture capitalists to make more informed investment decisions. Based on this background, this research will focus on two typical valuation methods. They are Discounted Cash Flow (DCF) Analysis and Venture Capital (VC) Method and the applicability and challenges of these two valuation methods in venture capital investment area will be explored. This paper will also offer both theoretical insights and practical applications to analyze these two approaches by using case studies and empirical figures. The final results of the research show that each method has its own advantages and limitations so that the choice of which method to select depends on the specifics of the startups being evaluated. Lastly, the paper will end a summary of the main points made about each of the approaches and an outlook for future research directions in venture capital valuation field.

Bringing in the asset economy

This commentary on the ‘urban state venturism’, highlighting the state's pivotal role in driving large-scale urban investments, offers a nuanced reading with areas for a sympathetic critique. I advocate for a redefined starting point of analysis that centres on the emerging asset economy model. This prompts a consequential distinction between asset-based and commodity-based value/wealth creation, particularly in the context of public venture capital investments, which necessitates further empirical scrutiny. However, there is a risk that current and proposed future research falls into the ‘endogeneity trap’, underscoring the need to reinvigorate practice-oriented research to capture the evolving new modes of urban entrepreneurialism.