How Do Corporate Venture Capitalists Create Value for ...

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Table 1 Summary Statistics for Venture Capital Financing Rounds This table reports the descriptive statistics for the sample of individual investments by various venture capitalists from 1980 to 2004. Panel A presents the characteristics of CVC investments in entrepreneurial firms with at least one CVC investors (CVC backed firms). Panel B presents the characteristics of IVC investments in CVC backed entrepreneurial firms. Panel C presents IVC investments in entrepreneurial firms backed by IVCs alone (non-CVC backed firms). The main data source is VentureExpert database of SDC Platinum. The data was cross-references with other data sources (e.g., Jay Ritter data on firm age, SDC Platinum IPO list, D&B dataset, and CorpTech Explore database). Panel A: CVC Round Investments in CVC Backed Companies Num of Obs Mean St Dev. 40 Panel B: IVC Round Investments in CVC Backed Companies Panel C: IVC Round Investments in non-CVC Backed Companies Num of Obs Mean St Dev. Num of Obs Mean St Dev. Firm Age at Round Date 6882 8.61 10.64 43077 14.21 14.16 105044 13.33 11.96 Round Number (Sequence) 7180 2.36 2.24 45122 3.93 2.67 110663 3.12 2.44 Round Number of Investors 7180 6.25 4.37 45122 7.19 4.96 110663 4.55 3.69 VC Investment This Round ($ mil.) 6767 3.59 8.77 43404 2.12 4.53 103516 2.04 9.43 VC Investment This Round Relative to Total Round Amount (%) 6740 29.17 28.38 43149 23.85 25.86 102794 39.56 34.32 Total Round Amount ($ mil.) 6866 18.37 26.22 43816 14.17 20.63 104180 8.04 23.44 VC Investment This Round Relative to Total VC Investment (%) 6754 10.56 15.22 43383 4.81 7.32 103374 14.25 22.21 Company Post Round Valuation ($ mil) 3158 124.14 186.47 18801 96.60 141.32 29030 55.14 110.44 Firm Investment This Round Relative to Post Round Valuation (%) 3104 6.34 18.62 18524 6.25 9.36 28492 12.44 420.31 Reputation of Existing IVCs: Age 7180 12.88 7.19 45122 13.73 6.65 110662 13.22 8.03 Fund Raised Over Past 5 Years ($ mil) 6886 431.39 658.86 44539 474.29 585.45 106054 372.09 672.82 Fund Raised Since 1965 ($ mil) 6957 533.47 841.21 44759 592.35 734.62 107498 492.55 939.55 Number of Rounds Participated Since 1965 7180 400.95 454.98 45122 435.68 464.30 110663 396.93 555.48 Total Amount Invested Since 1965 ($ mil) 7179 530.45 771.72 45122 590.46 766.71 110654 536.92 979.95
Table 2a Patterns of Corporate Venture Capital Investments: Effect of Firm and Industry Characteristics This table reports the results of the probit analysis that explores corporate venture capitalists investment patterns. The dataset contain round by round investments by CVCs and IVCs from 1980 to 2004. The dependant variable is equal to 1 for first CVC-firm round of financing, and it is equal to 0 for all IVC rounds that occur prior to CVC entrance (post CVC entrance rounds are excluded from consideration). The independent variables are (i) entrepreneurial firm characteristics; (ii) entrepreneurial firm industry characteristics; (iii) reputation of the existing IVCs at the financing round; and (iv) other control variables. The main data source is VentureExpert database of SDC Platinum. The data was crossreferences with other data sources (e.g., Jay Ritter data on firm age, SDC Platinum IPO list, D&B dataset, and CorpTech Explore database). The t-statistics are reported in parentheses. ***, **, and * indicate significance of t-statistics at the 1, 5, and 10 percent levels, respectively. Panel A: 2 Digit SIC Industry Definition Panel B: Fama-French Industry Definition (1) (2) (3) (4) (5) (6) (7) (8) Firm Characteristics Firm Age at Round Date -0.0136 -0.0148 -0.0145 -0.0136 -0.0159 -0.0171 -0.0168 -0.0159 (5.10)*** (5.58)*** (5.50)*** (5.10)*** (4.97)*** (5.22)*** (5.17)*** (4.93)*** Round Number -0.0332 -0.0367 -0.0377 -0.0336 -0.0336 -0.0362 -0.0369 -0.0335 (3.03)*** (3.38)*** (3.48)*** (3.06)*** (3.52)*** (3.83)*** (3.92)*** (3.51)*** Log Dollar Amount Invested 0.2941 0.2840 0.2881 0.2936 0.3009 0.2934 0.2977 0.3015 This Round (21.50)*** (21.62)*** (21.51)*** (21.48)*** (23.86)*** (24.07)*** (24.04)*** (23.90)*** Log Total Prior Investment -0.0094 -0.0090 -0.0087 -0.0093 -0.0107 -0.0107 -0.0102 -0.0108 Average Industry Characteristics (1.93)* (1.87)* (1.80)* (1.90)* (2.59)*** (2.59)*** (2.47)** (2.60)*** Capital Expenditures 1.3682 1.5402 1.7033 1.3111 1.9497 2.0667 2.1261 1.9823 (1.57) (1.83)* (2.03)** (1.50) (3.43)*** (3.75)*** (3.86)*** (3.47)*** R&D 0.0397 0.0396 0.0394 0.0378 0.0337 0.0340 0.0335 0.0353 (2.97)*** (2.97)*** (2.96)*** (2.81)*** (3.83)*** (3.88)*** (3.82)*** (3.99)*** Sales Growth Over Past 3 0.0034 0.0052 0.0033 0.0034 0.2761 0.2544 0.2297 0.2643 Years (0.37) (0.50) (0.24) (0.39) (3.28)*** (3.04)*** (2.72)*** (3.12)*** Return on Industry Portfolio 0.0141 0.0020 0.0020 0.0151 0.0448 0.0271 0.0195 0.0440 Over Prior 6 Month (0.28) (0.04) (0.04) (0.30) (1.20) (0.72) (0.52) (1.18) Beta 0.0632 0.0702 0.0708 0.0648 0.0533 0.0574 0.0583 0.0540 (3.24)*** (3.62)*** (3.65)*** (3.32)*** (2.99)*** (3.24)*** (3.29)*** (3.06)*** Herfindahl Index -0.4188 -0.4457 -0.4076 -0.6936 -0.6804 -0.6273 (1.97)** (2.11)** (1.96)* (2.20)** (2.18)** (1.99)** Largest Market Share (Sales) -0.3871 -0.3897 (2.29)** (2.46)** Average Reputation of Existing IVCs IVCs Age -0.0193 -0.0194 -0.0164 -0.0165 (6.73)*** (6.75)*** (7.18)*** (7.22)*** Total Number of Rounds -0.0002 -0.0002 Invested (5.03)*** (6.70)*** Total Amount Invested ($mil.) -0.0001 -0.0001 (5.03)*** (6.67)*** Internet Company Dummy 0.0895 0.1066 0.1053 0.0873 0.1392 0.1496 0.1474 0.1326 (2.23)** (2.65)*** (2.60)*** (2.17)** (4.51)*** (4.84)*** (4.75)*** (4.39)*** Startup/Seed Stage at First Round of VC Financing Early Stage at First Round of VC Financing Expansion Stage at First Round of VC Financing Later Stage at First Round of VC Financing 0.2332 0.2441 0.2351 0.2336 0.2499 0.2585 0.2466 0.2472 (3.14)*** (3.30)*** (3.19)*** (3.14)*** (3.90)*** (4.04)*** (3.87)*** (3.86)*** 0.3985 0.4081 0.3936 0.3971 0.3407 0.3541 0.3356 0.3394 (5.28)*** (5.42)*** (5.25)*** (5.26)*** (4.85)*** (5.04)*** (4.79)*** (4.83)*** 0.2462 0.2616 0.2545 0.2461 0.2142 0.2314 0.2196 0.2122 (3.53)*** (3.76)*** (3.67)*** (3.53)*** (3.39)*** (3.66)*** (3.49)*** (3.36)*** 0.2377 0.2485 0.2428 0.2384 0.2252 0.2375 0.2289 0.2228 (3.64)*** (3.83)*** (3.76)*** (3.66)*** (3.88)*** (4.10)*** (3.97)*** (3.84)*** Log Likelyhood 3503 3523 3524 3502 5005 5022 5023 5005 Pseudo R 2 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.12 Observations 19370 19370 19370 19370 26359 26358 26358 26359 40
Page 1 and 2: How Do Corporate Venture Capitalist
Page 3 and 4: 1. Introduction How Do Corporate Ve
Page 5 and 6: documented that IVCs are able to cr
Page 7 and 8: control for firm industry, size, an
Page 9 and 10: Overall, our empirical findings ind
Page 11 and 12: a CVC since they represent financia
Page 13 and 14: Table 1 presents the summary statis
Page 15 and 16: We start with the probit analysis o
Page 17 and 18: could have received CVC financing b
Page 19 and 20: firms’ industry dummies to accoun
Page 21 and 22: experience similar time from first
Page 23 and 24: acking is of higher quality (in oth
Page 25 and 26: investment IPO firms are more likel
Page 27 and 28: Panel B of Table 6a reports the res
Page 29 and 30: IPO market, CVCs are able to attrac
Page 31 and 32: Market price is CRSP stock price an
Page 33 and 34: IVC backing dummy, and the reputati
Page 35 and 36: Our findings can be summarized as f
Page 37: Lindsey, L., 2004, “The Venture C
Page 41 and 42: Table 3 Amount Invested and Pricing
Page 43 and 44: Table 4b Exit Strategies for CVC Ba
Page 45 and 46: Table 5b Probability of Delisting f
Page 47 and 48: Table 6b Market Participants in CVC
Page 49 and 50: Table 7b Valuation of CVC Backed an

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