Try Before They Buy: Corporate Venture Capital and the Acquisition of Technology Start-Ups
- Topics:
- Innovation,
- Venture Capital
- Tags:
- Acquisition,
- Business Operations,
- Corporate Law,
- Finance,
- Investment,
- Mergers & Acquisitions,
- Venture Capital
- Source:
- University of Michigan
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Overview: Established firms have long invested in start-ups at early stages of their development, in part to gain access to new technologies and to identify potential acquisition targets. Despite the importance of these strategic motives for Corporate Venture Capital (CVC), prior studies have not explored the effectiveness of this approach relative to other mechanisms available to firms. This paper generates new empirical evidence by comparing the stock market reaction to two types of acquisition events involving 62 top CVC investors during 1987-2003: start-ups these firms fund and subsequently acquire ("CVC acquisitions") and start-ups they acquire "out-right" (i.e., without providing venture funding at earlier stages of the firm's development, which the authors refer to as "non-CVC acquisitions").
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Format: PDF | Size: 282KB | Date: Nov 2004 | Pages: 28
