Some Thoughts on the Theory of Corporate Venture Investing

In this note I develop some further thoughts that build on my paper entitled a "A Theory of Corporate Venturing." In this paper I develop a formal economic model of why corporations may face difficulties when making venture capital investments. In thinking broadly about the reasons why corporations may have difficulties when investing in entrepreneurial companies, I see three main sets of issues. The first set of reasons revolves around issues of intellectual property rights. The second set relates to strategic conflicts of interest. The third set concerns issues of organizational design and conflict within the corporation. The theory paper deals directly with the second set of issues, the conflicts of interest that result from the strategic objectives of the corporation. In this note I therefore want to focus on the first and third area of problems. Many would argue that entrepreneurs don't want corporate investors because they do not want their intellectual property stolen. I would actually argue that, while intellectual property is important, these problems should not be overstated