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We examine how risk-taking propensities of traditional and corporate VC investors differ when they undertake uncertain cross-border investments as syndicate leaders. Additionally, building on prior research on experiential learning, we focus on different sources of experience – internal network, cross-border, and negative outcome - that may influence the propensity of lead CVCs to make cross-border investments. We empirically test our hypotheses on a sample of VC investments in seven European countries. Our result show that CVCs are more likely to invest cross-border than other VC. This effect is stronger if they leverage internal network experience but weaker if they have experienced negative investment outcomes previously. Our study contributes to work on VC internationalization as well as to the literature on experiential learning under uncertainty.
Joining a Shark Tank: When Does a Corporate-venture-capitalist (CVC) Invest in Ventures with Other CVC?
Firms face trade-off when joining inter-firm collaborations formed by other firms: while the presence of existing partners lowers uncertainty of the collaboration, it creates competition among partners. This paper examines how CVCs balance this trade-off when deciding to join a venture that received prior investments from other CVCs (“existing CVCs”). I find that a CVC was more likely to invest in a venture with existing CVCs when the venture is young, but less likely to invest in the venture when there is a greater market overlap between the new and existing CVCs. Such negative relationship was even greater when a larger portion of the venture’s board members represented the existing CVCs and when the focal CVC had more investment experience in the venture’s industry.
The Progress Towards Understanding the Tensions in Corporate Venture Capital: A Systematic Review
Aalto University Markku Maula,
Corporate venture capital (CVC), that is, equity investments made by established firms in private entrepreneurial startups is an important phenomenon, but rife with paradoxical tensions. Despite the accumulation of research on CVC, the progress towards understanding the tensions in CVC has not been reviewed. It is important to study the tensions because we can expand our understanding of why, how, and when different stakeholders in CVC have contradictory but interdependent interests and how those influence their behaviors and performance. We contribute to advancing this research through a systematic review of CVC literature over the past four decades, examining the progress of understanding these tensions, and identifying avenues for future research.
Timing of Corporate Venture Capital Investment, Strategic (Mis)Alignment, and Venture Success
This study investigates the relationship between the timing of corporate venture capital (CVC) investment and venture success. Drawing on the path dependence logic, we first posit that the extent of strategic alignment between ventures and CVCs changes across the three phases of ventures’ lifecycle, with the lowest level of strategic alignment being in the middle phase. We then hypothesize that there is a U-shaped relationship between CVC investment timing and venture success. We test our hypothesis employing a logistic regression and a machine learning technique for methodological triangulation. Results of the preliminary analysis corroborate the main thesis of the current study that strategic (mis)alignment across CVC investment timing plays an important role in influencing venture success.