EconPapers    
Economics at your fingertips  
 

Corporate investments in startups: CVC unit vs. direct investment

Sungjoung Kwon and Nomalia Manna

Journal of Banking & Finance, 2025, vol. 175, issue C

Abstract: A significant fraction of corporate investments in startups are made directly without relying on corporate venture capital (CVC) units. Moreover, most firms making investments via CVC programs also make direct investments. We show that such direct investments are utilized to flexibly respond to investment opportunities over a short period of time: (1) firms respond to a competition shock by sharply increasing direct investments; (2) firms rely on direct investments when startups are easier to evaluate in the short term; and (3) direct investments are less likely to be followed up. We find no evidence that direct investments are used to entrench managers.

Keywords: Corporate finance; Venture capital (search for similar items in EconPapers)
JEL-codes: G24 G30 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426625000640
Full text for ScienceDirect subscribers only

Related works:
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:eee:jbfina:v:175:y:2025:i:c:s0378426625000640

DOI: 10.1016/j.jbankfin.2025.107444

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-04-30
Handle: RePEc:eee:jbfina:v:175:y:2025:i:c:s0378426625000640