Multiple Corporate Venture Capital Syndication and Venture Performance: The Role of Venture Industry Relatedness

Adrian Friederich & Sophia Liebke

Student thesis: Master thesis

Abstract

By highlighting the importance of venture industry relatedness, we explore the overlooked phenomenon of multiple corporate venture capitalists (CVCs) investing in the same venture. More specifically, we uncover how the combination of multiple CVCs and venture industry relatedness in a syndicate can enhance venture innovative performance. In order to do so, we analyze a sample of 3,449 U.S. ventures in the information and communications technology (ICT) and life science industries that received funding between 1985 and 2005 from independent venture capitalists (IVCs), CVCs and other investor types. We do not find evidence that multiple or single CVC-backed ventures exhibit higher rates of innovation compared to those backed by other investor types. However, we uncover that multiple CVCs enhance venture innovative performance, if industry relatedness between the venture and at least one of the invested CVCs is given. Therefore, multiple CVCs and venture industry relatedness are very different yet complementary mechanisms that can be employed to enhance the creation of innovative output of new ventures. We offer two conceptual explanations for our main finding. Our study contributes to the entrepreneurial finance and CVC literature.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2019
Number of pages122
SupervisorsFrancesco Di Lorenzo