Corporations and the Financing of Innovation: The Corporate Venturing Experience

Posted: 1 Dec 2009

See all articles by Paul A. Gompers

Paul A. Gompers

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Date Written: 2002

Abstract

In the last forty years corporate venture programs in the United States were characterized by a cyclic nature, a time during which corporate venture programs were often halted before the fruits from the investment activity could be realized.Presenting the history, structure, and performance of corporate venture programs in the United States, it is demonstrated that the corporate venture capital market in the United States has gone through three waves of activity that track the overall independent nature of the venture capital market. Using data obtained from VentureOne on organizations that received venture capital financing, the trends of corporate venture investments and strategies adopted by investors are analyzed. The analysis reveals that the strategic fit between corporate venture capital investments and the parent corporation's business significantly increased and that such investments were often made in related industries. In addition, contrary to previous assumptions corporate venture capital investments in general have been more successful than independent venture capital investments. Corporations have gradually adopted some of the best practices from independent venture capital sector and that success of corporate venture investing has increased over time. (VRS)

Keywords: VentureOne dataset, Financial markets, Venture capital, Innovation process, Financing, Capital investments, Corporate ventures, Investments

Suggested Citation

Gompers, Paul A., Corporations and the Financing of Innovation: The Corporate Venturing Experience (2002). Economic Review, Vol. , Issue Fourth Qua, p. 1-23 2002. Available at SSRN: https://ssrn.com/abstract=1513133

Paul A. Gompers (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6297 (Phone)
617-496-8443 (Fax)

Harvard University - Entrepreneurial Management Unit ( email )

Cambridge, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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