Are Sharks More Dangerous at Dusk or Dawn? Timing of CVC Investments and Ventures' Commercial Performance

The evidence on how corporate venture capital (CVC) investments affect investee ventures’ commercial performance is mixed. An examination of the timing of CVC investments can offer new insights on this contention. Previous studies showed that the timing of ventures’ resource acquisition is crucial for venture outcomes. However, these studies have overlooked the role of incumbents as a resource channel and the tradeoffs associated with timing. Building on resource dependence theory (RDT), we explore how the timing of CVC investments alters the power balance between investors and backed ventures, significantly influencing ventures’ commercial performance. We further examine how the timing of venture board seats obtained by CVC investors affects this relationship. Using a dataset of 294 Norwegian ventures active in knowledge-intensive industries from 2004 to 2015, we offer evidence for a differential effect of early- vs. late-stage CVC investments, showing that late-stage investments significantly increase commercial performance. We also find that associating a venture board seat with a CVC investment moderates this effect; ventures are associated with greater commercial performance when late-stage investments come without board seats. We suggest that board seats prevent ventures from forming investment ties with additional CVC investors, limiting ventures’ external ties crucial for market success.