Venture Capital and Innovation Strategies

Marco Da Rin, Maria Penas

Research output: Working paperDiscussion paperOther research output

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Abstract

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.
Original languageEnglish
Place of PublicationTilburg
PublisherTILEC
Number of pages44
Publication statusPublished - 17 Jul 2015

Publication series

NameTILEC Discussion Paper
Volume2015-009

Fingerprint

Venture capital
Innovation strategy
Funding
Absorptive capacity
Innovation activities
Investors
Financial intermediaries
Venture capital financing
Financing constraints
Public policy
Public funding
Selection effects
Capital gains
Corporate strategy
Technological innovation
Patents

Keywords

  • venture capital
  • entrepreneurship
  • innovation strategy
  • research & development
  • public policy

Cite this

Da Rin, M., & Penas, M. (2015). Venture Capital and Innovation Strategies. (TILEC Discussion Paper; Vol. 2015-009). Tilburg: TILEC.
Da Rin, Marco ; Penas, Maria. / Venture Capital and Innovation Strategies. Tilburg : TILEC, 2015. (TILEC Discussion Paper).
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Da Rin, M & Penas, M 2015 'Venture Capital and Innovation Strategies' TILEC Discussion Paper, vol. 2015-009, TILEC, Tilburg.

Venture Capital and Innovation Strategies. / Da Rin, Marco; Penas, Maria.

Tilburg : TILEC, 2015. (TILEC Discussion Paper; Vol. 2015-009).

Research output: Working paperDiscussion paperOther research output

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Da Rin M, Penas M. Venture Capital and Innovation Strategies. Tilburg: TILEC. 2015 Jul 17. (TILEC Discussion Paper).