Governance in entrepreneurial ecosystems: Venture capitalists vs. technology parks
Douglas Cumming,
Jochen Christian Werth and
Yelin Zhang
No 135, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE
Abstract:
We argue two alternative routes that lead entrepreneurial start-ups to acquisition outcomes instead of liquidation. On one hand, acquisitions can come about through the control route with external financers such as venture capitalists (VCs). VCs take control through their board seats along with other contractual rights that can bring about changes in a start-up necessary to successfully attract a strategic acquirer. Consistent with this view, we show that VCs often replace the founding entrepreneur as CEO long before an acquisition exit. On the other hand, acquisitions can come about through advice and support provided to the start-up, such as that provided by an incubator or technology park. Based on a sample of 251 Crunchbase companies in the U.S. over the years 2007 to 2014, we present evidence that is strongly consistent with these propositions. Further, we show that the data indicate a tension between VC-backing of start-ups resident in technology parks insofar as such start-ups are slower to become, and less likely to be, acquired.
Keywords: Entrepreneurship; Entrepreneurial Finance; Governance; Technology Park; Incubator; Board of Directors; Venture Capital; Angel (search for similar items in EconPapers)
JEL-codes: G23 G24 L26 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cfn, nep-cse, nep-ent and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
https://www.econstor.eu/bitstream/10419/140893/1/859625702.pdf (application/pdf)
Related works:
Journal Article: Governance in entrepreneurial ecosystems: venture capitalists vs. technology parks (2019) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:135
DOI: 10.2139/ssrn.2777423
Access Statistics for this paper
More papers in SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().