The Darkside of Corporate Venture Capital: A Theoretical Framework

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Abstract

This paper develops a theoretical model where a startup seeks financing from an investor in order to develop an idea into a commercial project. Investors that possess valuable complementary assets can contribute the most to the success of the startup but also have the strongest incentives to misappropriate the idea. The startup chooses not to contract with such investors when (i) IPRs and other protection mechanisms are weak, and (ii) the initial upfront investment is limited relative to the value of the project. Large private benefits to the investor, e.g., in the form of learning benefits, decrease misappropriation incentives and result in better matches between startups and investors
Original languageEnglish
Publication date2021
Number of pages20
Publication statusPublished - 2021
EventDRUID21 Conference - Copenhagen Business School, Frederiksberg, Denmark
Duration: 18 Oct 202120 Oct 2021
Conference number: 42
https://conference.druid.dk/Druid/?confId=62

Conference

ConferenceDRUID21 Conference
Number42
LocationCopenhagen Business School
CountryDenmark
CityFrederiksberg
Period18/10/202120/10/2021
Internet address

Keywords

  • Corporate venture capital
  • Startups
  • Innovation

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