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Exchanges of innovation resources inside venture capital portfolios

Juanita Gonzalez-Uribe

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: I explore the prevalence of exchanges of innovation resources inside venture capital portfolios. I show that after companies join investors’ portfolios, several proxies of exchanges between them and portfolio companies (relative to matched nonportfolio companies) increase by an average of 60%. The increase holds when joining events are plausibly exogenous and when VCs’ bargaining power and potential conflicts of interest are low. Three novel mechanisms are supported: carve-outs, spawning, and recycling, whereby entrepreneurs divest innovation units, start new ventures, and reuse assets in other portfolio companies, respectively. Results suggest that returns to innovation are higher in venture capital portfolios.

Keywords: Innovation resources; State pension funds; Venture capital portfolios (search for similar items in EconPapers)
JEL-codes: G24 G34 O31 O34 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2020-01-01
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Published in Journal of Financial Economics, 1, January, 2020, 135(1), pp. 144 - 168. ISSN: 0304-405X

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