Venture Capital and Innovation Strategies

Forthcoming, Industrial and Corporate Change

44 Pages Posted: 17 Apr 2015 Last revised: 27 Sep 2016

See all articles by Marco Da Rin

Marco Da Rin

Tilburg University, Department of Finance; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

María Fabiana Penas

Universidad Torcuato Di Tella

Date Written: July 17, 2016


Venture capital investors are specialized financial intermediaries that provides funding for technological innovation with the goal of realizing a capital gain within a few years. We are the first to examine the association of venture capital funding with a company’s choice of innovation strategies. We employ a unique dataset of over 10,000 innovative Dutch companies, some of which received venture financing. The data include detailed information on patent applications, innovation activities, and other company characteristics. We find that companies backed by venture capital focus on the build-up of absorptive capacity by engaging in both in-house R&D and in the acquisition of external knowledge. Companies that receive public funding, instead, are able to relax their financing constraints and perform more innovation activities without focusing solely on absorptive capacity. Our results also suggest that the correlation between venture capital funding and the build-up of absorptive capacity is not only due to a selection effect. We derive implications of these findings for corporate strategy and public policy.

Keywords: Venture Capital; Entrepreneurship; Innovation Strategy; Research & Development; Public Policy

JEL Classification: G24, O32, O38

Suggested Citation

Da Rin, Marco and Penas, María Fabiana, Venture Capital and Innovation Strategies (July 17, 2016). Forthcoming, Industrial and Corporate Change. Available at SSRN: or

Marco Da Rin (Contact Author)

Tilburg University, Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE

European Corporate Governance Institute (ECGI)

B-1050 Brussels

María Fabiana Penas

Universidad Torcuato Di Tella ( email )

Saenz Valiente 1010
C1428BIJ Buenos Aires

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