Do Corporate Venture Capitalists Add Value to Start‐Up Firms? Evidence from IPOs and Acquisitions of VC‐Backed Companies

Vladimir I. Ivanov and Fei Xie

Financial Management, 2010, vol. 39, issue 1, 129-152

Abstract: We present evidence that corporate venture capitalists (CVCs) add value to start‐up companies only when the start‐ups have a strategic fit with the parent corporations of CVCs. We find that CVCs provide a variety of services and support that suit the specific needs of start‐ups operating in different industries. CVC‐backed start‐ups are able to obtain higher valuations at the IPO than non‐CVC‐backed ones, and the value added by CVCs concentrates in start‐ups with a strategic overlap with CVC parents. Entrepreneurial companies with strategic CVC backing also receive higher takeover premiums when they become acquisition targets.

Date: 2010
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https://doi.org/10.1111/j.1755-053X.2009.01068.x

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