M.Com. (Business Management) / With organisations facing increased pressure due to the tougher economic climate, there is an increasing need to remain competitive and profitable. One such way an organisation can endeavour to do this, is through the implementation of corporate entrepreneurship. As a form of corporate entrepreneurship, corporate venturing is gaining prevalence as a method with which an organisation can take advantage of opportunities in the environment that can contribute to the overall competitiveness and profitability of the organisation. The purpose of this study was to explore the organisational motives for pursuing corporate venturing. A literature study and interviews with respondents, who met the criteria of the study, were the chosen means of collecting data. The study examined through the literature review, the subjects supporting the objectives of the research, namely the definition of corporate venturing, the different types of corporate venturing that exist, and the main reasons why an organisation would venture. Each subject was investigated individually, after which the research literature was evaluated to determine the most common reasons why an organisation would choose to implement corporate venturing. The research methodology for the study made use of a qualitative research technique, and the primary data were gathered via personal interviews. The questions put forward to the respondents were aligned with the objectives and propositions as set out in the study. The literature review and data obtained through the respondents suggested that the reasons for pursuing a corporate venture were varied and cannot necessarily be singled out; organisations chose to implement a corporate venture for several reasons. Therefore, there were similarities between the motives as identified in the literature, and the motives identified by the respondents who participated in the study.

Venture capital has been a key driver of economic growth and employment. Venture capital funds consider many aspects when selecting targets for investment including the level of innovativeness present within the target’s products and services. This research examines what factors are considered to be most important by traditional and corporate venture capital investors during their investment decision. It continues to investigate the nature of the relationship between the level of innovativeness in products and services and the success in achieving two important steps in the venture capital value creation cycle: receiving investment funding and achieving commercial success. The research finds higher levels of innovation correlate strongly with both value-adding factors, and discovers many additional considerations prioritised by venture capital investors. An additional perspective for considering the value creation from innovation is also proposed. / Dissertation (MBA)--University of Pretoria, 2013. / lmgibs2014 / Gordon Institute of Business Science (GIBS) / MBA / Unrestricted

The paper introduces venture leasing as a complement to venture capital. Venture leasing provides additional funds for start-up companies in exchange for equity stake in the company. This financing option is commonly used in the United States, but started being implemented in Europe as well.

Private equity is described as medium to long term financing of non-quated companies with high growth potential. Venture capital refers to investments made to get the companies off the ground or to expand. This thesis describes an investment process with focus on its crucial parts, identifies factors that make from venture capital a suitable partner for expanding abroad and analyzes development of provate equity funds in Central and Eastern Europe.

The venture capital (VC) contract prescribing various deal terms and conditions is considered vitally important to the VC investment process and should provide incentives for the entrepreneur whilst managing the venture capitalists (VCs) financial risk. This aspect of venture capital has not been extensively studied in South Africa especially amongst public sector funding agencies which have become an important source for early-stage VC funding. The objective of this study was to determine whether public sector VC investment terms in South Africa have been effective in supporting entrepreneurs and managing risk. The effectiveness of government‟s VC intervention was gauged through assessing various perceptions of entrepreneurs and public sector VCs on typical deal terms and conditions put in place between them. The perception study focused on 14 terms or provisions in relation to its frequency of use, importance to stakeholders, effectiveness in managing risk, rationale for inclusion and acceptance by entrepreneurs. The research found that VCs and entrepreneurs alike generally agree on the typical terms that should be included in the VC contract. Most of the terms which entrepreneurs considered to be important for the enterprise were also frequently used in VC contracts suggesting that the terms were generally effective in supporting entrepreneurs. Nevertheless, the research points towards a greater need for VCs to use incentivising terms such as the clawback provision in their contracts since the terms most frequently used were perceived to be effective in managing investment risk. Copyright / Dissertation (MBA)--University of Pretoria, 2010. / Gordon Institute of Business Science (GIBS) / unrestricted

A country’s economic growth is often related to its ability to be innovative. Innovation is unluckily difficult to measure and it is hard to find a specific source of innovation. Start-ups/new firms are however one of those specific sources. One investment type that has specialized in investing in young and highly technological portfolio-companies is venture capital. This thesis therefore aims to investigate the impact that the venture capital industry has on young and innovative companies in Sweden by a literature review and a quantitative study of approximately 60 different companies. By firstly thoroughly examining the underlying scientific theory for this subject and furthermore examining both the international as well as the Swedish venture capital industry it was possible to conduct an empirical study. A selection of young companies was taken from an impartial source and then identified as innovative or not by Schumpeter’s definition of innovation. Moreover these companies were investigated on the premises on whether they had been invested in by venture capital or not. It was found that the Swedish venture capital industry is highly involved in young and innovative Swedish companies, and a linkage between innovation and venture capital exists. However the answer to the question on whether it is venture capital that drives innovation or if it is already innovative companies that attract venture capital is inconclusive in this thesis and future studies in this field is needed.

<p> This dissertation studies the underexplored topic of contract design, emphasizing the cash flow, control and veto rights from the management perspective between the entrepreneurial venture and its investor, namely the venture capital investors. Cash flow rights are provisions that jointly determine the extent to which the VC receives a greater fraction of the startup’s cash flows. Depending on how these provisions are designed, it could protect VC’s interest, enabling the VC to capture more value at the expense of the entrepreneur. Control rights are determined by how much board seats VC and the entrepreneur agree to take. Board membership, by definition, provide directors with critical voting rights, enabling them to control venture’s strategy. Lastly, veto rights are negative covenants that protects VC’s interest by specifying what preferred shareholders (i.e., VCs) can stop an action from a venture. Across three empirical essays, I examine the antecedents and consequences of VC contract design. Certificate of incorporation is the key document (i.e., contract) signed and filed by the venture that establishes the rights, preferences, privileges, and restrictions of classes and series of the venture’s stock. By going over the contracts, I created a unique data set that contains detailed information about and exploit a unique research opportunity studying factors that influence the design of contracts and the strategic consequences of such contracts </p>

Thesis advisor: Thomas Chemmanur / My doctoral dissertation consists of three chapters focused on topics in entrepreneurial finance and corporate innovation. In the first chapter, I analyze secondary market patent transactions from public assignors (seller firms) to assignees (buyer firms). I show that firms with higher innovation productivity (more able to innovate) but with lower production efficiency (less able to commercialize) are more likely to sell patents distant from their operations. Using a linked assignor-assignee dataset, I find that patents technologically closer to buyer than to seller firms are more likely to be sold in a patent transaction, implying gains from trading patents. I document that, in the three years following patent transactions, seller firms experience a positive and statistically significant improvement in their ROA and operating profitability. I find that the improvement in ROA and operating profitability is concentrated in seller firms which increase their R&D focus after patent transactions, suggesting that an increase in innovation focus is one of the channels driving these results. Consistent with this channel, I find that inventors who are either newly hired by or remaining in assignor firms over the three years subsequent to patent transactions have technological expertise more similar to those of assignor firms. In the second chapter, co-authored with Xi Chen, we study how venture capitalists (VCs) create value in the product market for the entrepreneurial firms backed by them. By constructing a novel dataset based on Nielsen Retail Scanner and VentureXpert, we document that, compared to non-VC-backed firms, VC-backed startups have more than doubled their sales and seized more nationwide market share in the five years following the first VC investment. A further decomposition indicates that VC-backed firms achieve the growth in sales and market share by lowering their product prices. In addition, subsequent to the first VC investment, VC-backed firms enlarge their product portfolios by introducing new products and establishing new product lines, and they expand their products to more stores and geographic locations. Using the limited partner return as an instrument for the supply of VC financing, we show that the above effects are causal. We document heterogeneous value creation effects of VC financing for firms with different market share and for firms with different geographic proximity to the lead VC investors. This suggests that, apart from providing capital, VCs also add value to startups by directing their marketing strategy and monitoring their operations. In the third chapter, co-authored with Thomas Chemmanur, Jiajie Xu, and Xiang Zheng, we analyze the effect of the composition of venture capital (VC) syndicates on value creation to the entrepreneurial firms they invest in. We hypothesize that VCs may learn about each other’s skills at value creation when they co-invest together in entrepreneurial firms, allowing for more efficient value creation when they co-invest in subsequent syndicates. Further, if VCs view syndication as a repeated game, this may generate incentives to co-operate to a greater extent with each other when investing together in a syndicate, reducing the probability of conflicts among VCs. We empirically analyze the implications of these hypotheses and find the following. First, prior collaboration between a lead VC and any of the VCs in a syndicate leads to greater short-term value creation, as evidenced by greater sales growth, employment growth, probability of patented innovation, and the quality of innovations generated during the three years subsequent to VC syndicate investment. Second, prior collaboration between the lead VC and at least one of the syndicate members leads to greater long-term value creation, as evidenced by the higher probability of a successful exit (IPO or acquisition). Third, if the prior collaboration is very successful (leading to an IPO exit resulting from the previous collaboration), then there is even greater value creation by the VC syndicate compared to the case where the prior collaboration was less successful. Finally, consistent with prior collaboration allowing VCs to learn about each other’s value creation skills and reducing potential conflicts among the VCs forming a syndicate, syndicates with prior collaboration between the lead VC and at least one syndicate member are characterized by more uniform syndicate compositions across financing rounds. / Thesis (PhD) — Boston College, 2023. / Submitted to: Boston College. Carroll School of Management. / Discipline: Finance.

Initial Coin Offerings (ICOs) came into worldwide attention in 2018, when over $11.6 billion flowed through them. The CME Group launched Bitcoin futures contracts in December 2017, giving large funds their first regulated exposure to digital assets. As digital assets move towards the mainstream of finance, institutional investors have followed. This study comparatively analyzes Hedge Fund investment in digital assets against that of other institutional investment firm types (Private Equity and Venture Capital) by analyzing their crypto holdings and rebuilding an equally weighted portfolio for each fund. Under these conditions, the study succeeds in finding significant differences between hedge fund results in the sample and those of private equity/venture capital firms. Specifically, this study shows through the composite portfolios built that digital asset investments made by hedge funds generate a much higher return than that of private equity and venture capital firms. Average hedge fund investments have much higher trading volumes and market capitalizations than those made by private equity and venture capital firms, suggesting that PE and VC firms are taking higher risks by investing in new and little-known crypto projects. The results of this study signal that the hedge fund business model is much better suited for the high-risk, high-volatility cryptocurrency market than strategies employed by venture capital and private equity firms.

Previous academic literature examining the performance of private equity funds has documented that the average private equity fund has failed to outperform public equity markets. This underperformance coupled with a greater risk-return trade-off has failed to discourage investment in private equity markets. In fact, private equity firms have enjoyed record amounts of fund raising over the past several years. This phenomenon has been characterized as a puzzle and its investigation within the academic literature has only just begun. Using a unique and current data set covering private equity returns and their underlying cash flows, we examine performance measurements of private equity funds in the context of their relationships with one another and with public markets; as well as, examine the characteristics of the funds and their managers that drive these relationships. Our findings suggest that private equity investors are partially motivated by misinterpreted performance measurements and that this misinterpretation is compounded by fund reported residual values. These findings have important policy implications for both private equity fund managers and investors.