TY  - JOUR
AU  - Gompers, Paul A
AU  - Lerner, Josh
TI  - The Determinants of Corporate Venture Capital Successes:  Organizational Structure, Incentives, and Complementarities
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6725
PY  - 1998
Y2  - September 1998
DO  - 10.3386/w6725
UR  - http://www.nber.org/papers/w6725
L1  - http://www.nber.org/papers/w6725.pdf
N1  - Author contact info:
Paul Gompers
Harvard Business School
Baker Library 263
Soldiers Field
Boston, MA 02163
Tel: 617/495-6297
Fax: 617/496-8443
E-Mail: pgompers@hbs.edu

Josh Lerner
Harvard Business School
Rock Center 214
Soldiers Field
Boston, MA 02163
Tel: 617/495-6065
Fax: 617/496-7357
E-Mail: jlerner@hbs.edu
M1  - published as Paul Gompers, Josh Lerner. "The Determinants of Corporate Venture Capital Success: Organizational Structure, Incentives, and Complementarities," in Randall K. Morck, editor, "Concentrated Corporate Ownership" University of Chicago Press (2000)

AB  - We examine a sample of over thirty thousand transactions by corporate and other venture organizations.  Corporate venture investments in entrepreneurial firms appear to be at least as successful (using such measures as the probability of the portfolio firm going public) as those backed by independent venture organizations, particularly when there is a strategic overlap between the corporate parent and the portfolio firm. While corporate vendue capitalists tend to invest at a premium to other firms, this premium appears to be no higher in investments with a strong strategic fit.  Finally, corporate programs without a strong strategic focus appear to be much less stable, frequently ceasing operations after only a few investments, but strategically focused programs appear to be as stable as independent venture organizations.  The evidence is consistent with the existence of complementarities that allow corporations to effectively select and add value to portfolio firms, but is somewhat at odds with suggestions that the structure of corporate venture funds limits their effectiveness.
ER  -