Venture Capital and Knowledge Transfer

58 Pages Posted: 13 Dec 2015

See all articles by Roberta Dessi

Roberta Dessi

University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ)

Nina Yin

Central University of Finance and Economics (CUFE) - China Center for Human Capital and Labor Market Research; Tulane University

Multiple version iconThere are 2 versions of this paper

Date Written: June 28, 2015

Abstract

This paper explores a new role for venture capitalists, as knowledge intermediaries. A venture capital investor can communicate valuable knowledge to an entrepreneur, facilitating innovation. The venture capitalist can also communicate the entrepreneur's innovative knowledge to other portfolio companies. We study the costs and benefits of these two forms of knowledge transfer, and their implications for investment, innovation, and profitability. The model sheds light on the choice between venture capital and other forms of finance, and the implications of this choice for observed differences between VC-funded and non-VC-funded firms. Our analysis also provides a rationale for the use of certain contingencies (specifically, patent approval) in VC contracts documented by Kaplan and Stromberg (2003), and for recent evidence on patterns of syndication among venture capitalists.

Keywords: Venture capital, knowledge intermediaries, contracts, innovation, competition, patents

JEL Classification: D82, D86, G24, L22

Suggested Citation

Dessi, Roberta and Yin, Nina, Venture Capital and Knowledge Transfer (June 28, 2015). Available at SSRN: https://ssrn.com/abstract=2642596 or http://dx.doi.org/10.2139/ssrn.2642596

Roberta Dessi (Contact Author)

University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ) ( email )

Manufacture des Tabacs
21 Allees de Brienne
Toulouse, 31000
France

Nina Yin

Central University of Finance and Economics (CUFE) - China Center for Human Capital and Labor Market Research ( email )

Room 609 Academic Hall
39 South College Road
Beijing, 100081
China

Tulane University ( email )

6823 St Charles Ave
New Orleans, LA 70118
United States

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