Corporations and the Financing of Innovation: The Corporate Venturing Experience

This paper examines the experience of corporate venturing activity in the United States. We present a history of corporate venture programs and the motivations for such programs. We then explore a detailed history of corporate venture investments over the past twenty years. We find that the majority of corporate venture investments go to investments in related technologies. These investments are made increasingly with experienced, independent venture capital groups. While corporate venture capital investments tend to be later stage investments done at higher valuations and greater capital contributions, the success rates of these investments are surprisingly high. Even after controlling for the later stage of investment, corporate investments have higher success rates than the investments of independent venture capital organizations. The results argue that corporate investments in emerging companies can play an important role in the development of new technologies.