Interaction amongst independent and corporate venture capital and their influence on exit events

Abstract

We are studying interaction amongst independent venture capital (IVC) and corporate venture capital (CVC), and how exit events are influenced by IVC and CVC investments, in U.S biotechnology companies between 1977-2018. The research is executed applying both survival analysis and OLS modelling. The hazard ratio towards exit by IPO or M&A transaction is investigated using survival analysis, and how investments by IVC or CVC influence further funding rounds involving the two investor types. The latter part of the paper presents the executed OLS models, invested amount by IVC and CVC is further researched by investigating how earlier investments from IVC and CVC influence current funding, both amount invested in U.S dollars and the investment itself is being researched. Results from the executed survival analysis indicate that IVCs are more prone to push toward an exit compared to CVC investors. Further, the result indicates that likelihood of further in-vestment rounds involving IVC is negatively influenced by past investments by CVC, whereas CVC involvement is positively a˙ected by earlier IVC investments. Result from the con-ducted OLS models indicate that both invested amount and the investment itself influence investment decisions by IVC and CVC. Overall, our result indicates that the investor type influence the probability of a potential exit and the likelihood of further investments, and thus it is of importance for companies to appoint best possible investors.