Arnav Gupta
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: Arnav Gupta, Christine Choi
Abstract
Although prior research regarding corporate venture capital firms (CVCs) focuses on the singular relationship between CVCs and venture firms, there is a lack of effective analysis regarding the possibility of more complex relationships between startup venture firms and multiple CVCs. Current literature surrounding alliance partnerships highlights many benefits and drawbacks of an increasing alliance portfolio size. The goal of this study is to determine whether or not an increasing number of CVC investors is beneficial to a startup firm, operating under the question of whether or not a CVC firm is likely to invest in a venture if it has already received CVC funding elsewhere. Our main proposition suggests that investors will be hesitant to invest due to competition between other CVCs. The study explores the idea that this hesitation can be reduced if the potential CVC anticipates greater bargaining power within the firm due to access to resources necessary to the venture’s growth and success, and if the CVC aims to generate value through access to the venture’s knowledge in combination with unique resources internally. Hesitation may be increased, however, if there is fear over control, namely if existing CVC investors have a larger presence in the venture’s board. The data for this study was taken from CVC investments in the U.S. pharmaceutical sector from 2000-2020, due to the high reliance on CVC investment in this industry. The noted results from this study demonstrate that hesitancy among potential CVC investors increased due to competition among other CVC firms which have invested in the same venture.
