Venture capitalists and cooperative start-up commercialization strategy

Venture capitalists and cooperative start-up commercialization strategy

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Article ID: iaor2008614
Country: United States
Volume: 52
Issue: 2
Start Page Number: 204
End Page Number: 219
Publication Date: Feb 2006
Journal: Management Science
Authors:
Keywords: learning, management, investment
Abstract:

This paper examines the possible impact of venture capital (VC) backing on the commercialization direction of technology-based start-ups by asking: To what extent (if at all) do VC-funded start-ups engage in cooperative commercialization strategies (strategic alliances or technology licensing, or both) relative to a comparable set of start-ups, and with what consequences? To address these questions, I assemble a novel data set that matches firms receiving a federal research and development subsidy through the U.S. Small Business Innovative Research program to VC-funded firms by observable characteristics in five technology-intensive industries. These data allow decoupling of cooperative activity resulting from start-up development via the passage of calendar time from that due to association with VCS. An analysis of the 696 start-ups in the sample (split by an external funding source) suggests substantial boosts in both cooperative activity associated with VC-backed firms and in the likelihood of an initial public offering.

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