Industry-relatedness, geographic proximity and strategic decisions of corporate and independent venture capital-backed companies

Paolo Mazza and Fatima Shuwaikh

Journal of Small Business Management, 2024, vol. 62, issue 2, 966-1003

Abstract: In this paper, we use the essential dichotomy between independent venture capital (IVC) and corporate venture capital (CVC) to investigate the investment mechanisms that lead venture-backed companies to take different successful exit routes, that is, an initial public offering (IPO) or an acquisition. Through an analysis of a sample of 4206 US companies, we find that CVC-backed companies have a longer investment duration and a larger investment amount than IVC-backed companies. Our analysis reveals that geographic distance and industry-relatedness are influential for the success of the company. We show that industry-relatedness is more likely to lead to an acquisition exit while geographic proximity rather fosters IPO exits.

Date: 2024
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DOI: 10.1080/00472778.2022.2108432

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