Financing a corporate venture capital program

Firms invest in Corporate venture capital (CVC) for strategic reasons. Consistent with maintaining financial flexibility to fund CVC driven innovation and acquisitions, CVC investing firms hold less debt and more cash. Our results are more pronounced among the highest CVC investors and strategically driven CVC investors as such firms maintain the most conservative financial policies. CVC firms are more likely to acquire using cash and this relationship is more pronounced among strategic CVC firms. Overall, our results are consistent with studies that advances that firms with growth or investment opportunities maintain financial flexibility