How Do Corporate Venture Capitalists Create Value for ...

Table 7b
Valuation of CVC Backed and IVC Backed IPOs: Multivariate Tests
This table reports the results of the regression analysis of the IPO firms’ valuation at the offer price. The dependent variable is the log of the offer price to intrinsic value ratio log(OP/IV). The OP/IV
ratio is generated by the basic comparable firm approach using the Sales price multiple. The independent variables are the VC backing dummy, the CVC backing dummy, number of CVCs, CVC share
of total amount invested by VCs, number of CVC in the same Fama French industry as the IPO firm (“CVC Industry Match”), underwriter reputation, number of analysts following the firm in the first
year after the IPO, and the number of institutional investors participating in the IPO. The control variables are size (log of Total Assets), share of the firm sold in IPO, size of VC investment (log of total
amount invested by all VCs), IPO firm operating performance characteristics prior to IPO, industry dummies, and year dummies. Robust t-statistics are reported in parentheses. ***, **, and * indicate
significance at the 1, 5, and 10 percent levels, respectively.
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
VC Backing Dummy 0.368 0.366 0.355 0.363 0.386 0.384 0.376 0.381 0.371 0.369 0.361 0.365
(3.28)*** (3.25)*** (3.12)*** (3.20)*** (3.42)*** (3.39)*** (3.29)*** (3.35)*** (3.30)*** (3.27)*** (3.18)*** (3.22)***
CVC Backing Dummy 0.351 0.298 0.281
(3.79)*** (3.24)*** (3.06)***
Number of CVC 0.134 0.104 0.091
(3.01)*** (2.41)** (2.11)**
CVC Share of Total VC
0.407 0.259 0.238
Investment
(1.47) (0.93) (0.85)
CVC Industry Match 0.108 0.071 0.044
(1.99)** (1.88)* (1.39)
Underwriter Reputation 0.061 0.062 0.063 0.063 0.045 0.046 0.046 0.046 0.040 0.041 0.041 0.041
(4.36)*** (4.45)*** (4.48)*** (4.47)*** (3.23)*** (3.30)*** (3.30)*** (3.30)*** (2.88)*** (2.95)*** (2.94)*** (2.94)***
Number of Institutional
0.017 0.017 0.018 0.017 0.015 0.015 0.015 0.015
Investors
(8.95)*** (8.97)*** (9.13)*** (9.11)*** (7.31)*** (7.35)*** (7.42)*** (7.46)***
Number of Analysts 0.035 0.035 0.036 0.035
(4.10)*** (4.09)*** (4.25)*** (4.17)***
Avg Age of Existing IVCs 0.006 0.006 0.005 0.006 0.006 0.006 0.006 0.006 0.006 0.006 0.006 0.006
(1.73)* (1.73)* (1.67)* (1.79)* (1.93)* (1.93)* (1.90)* (1.98)** (1.93)* (1.93)* (1.90)* (1.96)*
Log (Total Assets) -0.222 -0.224 -0.224 -0.224 -0.334 -0.337 -0.339 -0.339 -0.357 -0.360 -0.362 -0.362
(8.21)*** (8.30)*** (8.26)*** (8.28)*** (11.63)*** (11.73)*** (11.77)*** (11.77)*** (12.23)*** (12.33)*** (12.40)*** (12.38)***
Log(Total Amnt Invested by 0.008 0.011 0.014 0.014 0.004 0.007 0.010 0.010 0.003 0.006 0.009 0.009
VCs)
(0.67) (0.93) (1.22) (1.21) (0.35) (0.60) (0.84) (0.83) (0.28) (0.54) (0.74) (0.75)
Share of Firm Sold in IPO -1.275 -1.273 -1.278 -1.281 -1.297 -1.296 -1.302 -1.304 -1.266 -1.266 -1.269 -1.273
(4.04)*** (3.93)*** (3.85)*** (3.92)*** (3.91)*** (3.81)*** (3.75)*** (3.79)*** (3.93)*** (3.83)*** (3.77)*** (3.80)***
EBITDA/Sales -0.006 -0.006 -0.007 -0.007 -0.007 -0.007 -0.008 -0.008 -0.007 -0.008 -0.008 -0.008
(0.24) (0.24) (0.28) (0.27) (0.28) (0.28) (0.31) (0.31) (0.30) (0.31) (0.33) (0.33)
CE in Total Assets 0.242 0.243 0.246 0.247 0.287 0.289 0.292 0.293 0.259 0.262 0.263 0.265
(0.84) (0.84) (0.85) (0.86) (1.00) (1.00) (1.01) (1.02) (0.90) (0.91) (0.92) (0.92)
R&D In Total Assets -0.010 -0.010 -0.011 -0.011 -0.011 -0.011 -0.012 -0.012 -0.011 -0.012 -0.013 -0.013
(0.31) (0.31) (0.35) (0.34) (0.35) (0.35) (0.39) (0.38) (0.37) (0.38) (0.41) (0.41)
Observations 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750
R-squared 0.16 0.16 0.16 0.16 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18
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