1 The Role of Corporate Venture Capital Funds in Financing Biotechnology and Healthcare: Differing Approaches and Performance Consequences

Corporate venture capital (CVC) is an alternative financing mechanism to traditional venture capital for promising start-ups. Yet, these programs have been operated in very different ways with some focusing on “reserving the right to play ” versus others focusing on “leveraging or upgrading the core. ” The paper explores the role of these different CVC models and assesses the performance consequences for the start ups. Existing research has found that CVC programs that focused on ventures related to their base businesses were likely to have more initial public offerings and higher valuations than independent venture capitalists. Furthermore, researchers have found that this effect may be due to corporate endorsement and/or the relationships actually developed between the business unit and the entrepreneurial venture. This paper confirms these findings for the biotechnology context