Venture capital activities under uncertainty: US and UK investors behavior

Fatima Shuwaikh*, Souad Brintte, Sabrina Khemiri, Rita Grego De Castro

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)

Abstract

We investigate how in the context of Corporate Venture Capital (CVC), the investment decisions affect the likelihood of their subsequent exit strategies. We use OLS and probit regression as well as Weibull distribution of residual values, given its reliability and validity for studying lifetime analysis. Based on a sample of 8722 VC-backed ventures with the first investment dates between 1999 and 2018 in United States (US) and United Kingdom (UK), the results show that the presence of CVCs positively affects the funding amounts and the duration of the investment. CVC funds are more generous and more patient than Independent Venture Capital (IVC) funds regarding their investments in ventures. Moreover, the findings provide evidence that the exit strategies are directly influenced by the funding amounts and the duration of the investment which are influenced, in turn, by the fund type. Greater funding increases the likelihood of IPO exit which is reduced by longer investment duration. Our results are robust to alternative estimation methods, namely two-stage treatment-effects regressions. These results help the various stakeholders (VC funds, investors, ventures) make crucial decisions regarding investment amounts and duration, and exit.
Original languageEnglish
Pages (from-to)885-917
Number of pages33
JournalAnnals of Operations Research
Volume334
Issue number1-3
DOIs
Publication statusPublished - Mar 2024

Keywords

  • Corporate Venture Capital
  • Duration
  • Exit strategies
  • Funding
  • Independent Venture Capital

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