Role of Strategic Alliances in VC Exits: Evidence from the Biotechnology Industry

Posted: 27 Mar 2017 Last revised: 3 Jun 2019

See all articles by Leonhard Brinster

Leonhard Brinster

University of Hohenheim

Christian Hopp

RWTH Aachen University

Tereza Tykvova

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Date Written: March 30, 2018

Abstract

This paper contributes to a better understanding of the relationship between strategic alliances and VC exits. Recent empirical literature concludes that strategic alliances improve the probability of successful exits (IPOs and M&As) for venture-backed companies. When we control for observed and unobserved heterogeneity in a cohort sample of companies, for the self-selection into alliance activity, and for censoring, we find a lower effect than prior studies. Moreover, we confirm a positive effect of strategic alliances only for IPOs, but not for M&As. These findings are consistent with the view that strategic alliances help companies to certify their quality towards potential buyers. In addition, we challenge the pervasive assumption that alliances have temporally constant effects on VC exits.

Keywords: Strategic Alliance, Venture Capital, Biotechnology, IPO, M&A

JEL Classification: G24, L24, L26

Suggested Citation

Brinster, Leonhard and Hopp, Christian and Tykvova, Tereza, Role of Strategic Alliances in VC Exits: Evidence from the Biotechnology Industry (March 30, 2018). 2017 Emerging Trends in Entrepreneurial Finance Conference. Available at SSRN: https://ssrn.com/abstract=2940680

Leonhard Brinster (Contact Author)

University of Hohenheim ( email )

Wollgrasweg 49
Stuttgart, 70599
Germany

Christian Hopp

RWTH Aachen University ( email )

Templergraben 55
52056 Aachen, 52056
Germany

Tereza Tykvova

University of Hohenheim - Faculty of Business, Economics and Social Sciences ( email )

Germany

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