How Do Corporate Venture Capitalists Create Value for ...

investment IPO firms are more likely to be delisted than low-CVC-investment IPO firms within five years
post-IPO. The likelihood of being acquired is similar across CVC and IVC backed firms as well as across
high-CVC-investment and low-CVC-investment IPO firms. Similar to our operating performance results,
this evidence does not directly support the notion that CVCs add greater product market value to the firms
backed by them compared to IVCs. These results, however, are consistent with CVC backed firms going
public at an earlier stage of their development compared to IVC backed IPO firms.
7. Participation of Reputable Underwriters, Institutional Investors, and Analysts in CVC Backed
and IVC Backed IPOs
In this sub-section we analyze CVCs’ ability to ease entrepreneurial firms’ access to the secondary
market. Specifically we analyze whether the presence of corporate venture backing in an IPO company
attracts participation by better quality and larger number of various market players in the IPO of CVC
backed firms compared to their participation in IPOs backed by IVCs alone. On the one hand, we
anticipate that IVCs, being more frequent players in the IPO market, will be able to attract better quality
and higher extent of participation by underwriters, institutional investors, and analysts. On the other hand,
CVC backing may signal higher firm quality to these market players, prompting them to participate in the
firm’s IPO in larger numbers. To evaluate these hypotheses, we compare CVC and IVC backed IPOs in
terms of the reputation of the underwriters involved; the number of institutional investors participating in
IPO; and institutional investor holding as a fraction of IPO shares sold; the extent of analyst coverage
immediately post-IPO; and the reputation of IVCs investing in the firm (recall that many CVC backed
firms also have IVCs coinvesting with them)..
7.1 Participation by Reputable Underwriters
In this sub-section we study the reputation of underwriters associated with CVC and IVC backed
IPOs. Panel A of Table 6a reports the summary statistics of average underwriter reputation associated
with different IPO sub-samples. We use two measures of underwriter reputation. First, we analyze the
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