Mark Mitu
Pronouns: He/Him
Research Mentor(s): Christine Choi
Research Mentor School/College/Department: Ross/ Strategy / Business
Program: UROPF
Session: Session 4 (1:40pm – 2:30pm)
Authors:
Abstract
While current Corporate Venture Capitalist (CVC) literature assesses the dynamics of the relationship between a CVC and a venture firm, there lacks an understanding of more complex partnerships between multiple CVC investors and a startup. Alliance partnership research focusing on the effects of an Alliance Portfolio on the measured success of a startup venture concludes a nuanced range of benefits and challenges in an increasing number of alliance partners in a single portfolio. Drawing on the insights of alliance portfolio research, this study examines whether having more CVC investors will be beneficial or harmful to a startup venture. One proposed idea is that CVC investors may worry about competitive tension arising from competing CVCs which have already invested in the venture, thus reducing the probability that they will ultimately invest. This study predicts that potential CVC worry may be mitigated if a prospective CVC expects to retain greater bargaining power as a result of the owning more technological resources that contribute to the venture’s growth, or that if the prospective CVC expects to create greater value from access to the venture’s knowledge by possessing dissimilar yet potentially innovative resources. Data is pooled from CVC investments in U.S. pharmaceutical and biotechnology ventures over a twenty year period from 2000-2020, chosen because of the tendency for these industries to rely heavily on CVC investment. Overall, the results of the research support these predictions, as it was seen that the probability of a prospective CVC investing in a venture with existing CVC investment decreased along with the expected level of competition with existing CVCs.
