Two faces of early corporate venture capital funding: Promoting innovation and inhibiting IPOs

Ji Youn Kim, Haemin Dennis Park

Research output: Contribution to journalArticlepeer-review

9 Scopus citations


We examine the dual effects of corporate venture capital (CVC) funding in a startup's early stage on the startup's long-term innovation rate and exit outcome. Based on a sample of 473 startups funded by independent venture capitalists and/or corporate venture capitalists, we find that startups that received CVC funding in their first three years of life tend to patent more but are less likely to go public, after accounting for their propensity to receive early CVC funding. Moreover, the detrimental effect of early CVC funding on the likelihood of an IPO is more pronounced when the startup's founders are novice entrepreneurs. It appears that the incentives and capabilities of corporate investors leave a strong imprinting effect on a startup's long-term innovation rate and exit outcomes. Our study has implications for CVC research, and more broadly, for the literature on the rate and direction of innovation by startups.

Original languageEnglish
Pages (from-to)161-175
Number of pages15
JournalStrategy Science
Issue number3
StatePublished - Sep 2017

Bibliographical note

Funding Information:
value of 1 if a startup received funding from at least one corporate investor within the first three-year period since it was founded. Consistent with prior research, we excluded diversified banks and insurance companies as CVC investors, because they appeared to have no strategic motivation for acquiring external technology, and the resources they provided were not directly related to the technology commercialization of startups (Dushnitsky and Lenox 2005a, Dushnitsky and Shaver 2009).

Publisher Copyright:
Copyright: © 2017 INFORMS.


  • Corporate venture capital
  • IPO
  • Imprinting effect
  • Innovation

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation


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