Venture Capital as a Catalyst to Commercialization

34 Pages Posted: 10 Jan 2010 Last revised: 1 May 2013

See all articles by Sampsa Samila

Sampsa Samila

University of Navarra, IESE Business School

Olav Sorenson

Yale School of Management

Date Written: January 9, 2010

Abstract

We find that public research funding and venture capital have a complementary relationship in fostering innovation and the creation of new firms. Based on a panel of metropolitan areas in the United States from 1993 to 2002, we find that the positive relationships between government research grants and the rates of patenting and firm formation in a region become more pronounced as the supply of venture capital in that region increases. Our results remain robust to estimation with an instrumental variable to address potential endogeneity in the provision of venture capital. Consistent with perspectives that emphasize the importance of an innovation ecosystem, our results therefore point to a strong interaction between private financial intermediation and public research funding in promoting entrepreneurship and growth.

Keywords: Financial intermediaries, R&D, research grants, science, innovation, patenting, entrepreneurship

JEL Classification: G24, L26, O38, R10

Suggested Citation

Samila, Sampsa and Sorenson, Olav, Venture Capital as a Catalyst to Commercialization (January 9, 2010). Available at SSRN: https://ssrn.com/abstract=1533787 or http://dx.doi.org/10.2139/ssrn.1533787

Sampsa Samila (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Olav Sorenson

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

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