Catching Disruption: Regulating Corporate Venture Capital
86 Pages Posted: 24 Dec 2016 Last revised: 7 May 2019
Date Written: August 1, 2017
Sesame Street, Walgreens, 7-Eleven, General Motors, Campbell Soup—these are not the names of companies that come to mind when thinking about the startup world. Yet, each of these companies started its own corporate venture capital arm in the last eight years. Corporate venture capital (“CVC”)—equity investments in external startups made by corporations or investment entities designated by corporations—no longer play a minor role in venture capital: they have become an influential force in the field. Business scholars have been at the forefront of studying this newly powerful phenomenon. Thus far, however, legal scholars have overlooked CVCs. Legal scholars—and many in the venture capital community—see only two players: traditional venture capital firms and entrepreneurs. The failure to appreciate the significance of CVCs as a third major player impoverishes theoretical and practical accounts of venture capital. This Article reframes the legal discussion of venture capital to incorporate key shifts wrought by CVCs in areas from corporate governance to risk allocation.
Note: This paper was selected from a call for papers for the panel “Business Law in the Global Gig Economy: Legal Theory, Doctrine, and Innovations in the Context of Startups, Scaleups, and Unicorns,” AALS annual meeting, Jan. 5, 2017.
Keywords: corporate venture capital, CVC, startups, corporate finance, technology companies, securities regulation, conflicts of interest, transparency, corporate boards, SEC, Regulations S-K and S-X, innovation ecosystem
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