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Venture Capitalists and Cooperative Start-up Commercialization Strategy

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  • David H. Hsu

    () (Management Department, The Wharton School, University of Pennsylvania, 2000 Steinberg Hall-Dietrich Hall, Philadelphia, Pennsylvania 19104)

Abstract

This paper examines the possible impact of venture capital (VC) backing on the commercialization direction of technology-based start-ups by asking: To what extent (if at all) do VC-funded start-ups engage in cooperative commercialization strategies (strategic alliances or technology licensing, or both) relative to a comparable set of start-ups, and with what consequences? To address these questions, I assemble a novel data set that matches firms receiving a federal research and development subsidy through the U.S. Small Business Innovative Research program to VC-funded firms by observable characteristics in five technology-intensive industries. These data allow decoupling of cooperative activity resulting from start-up development via the passage of calendar time from that due to association with VCs. An analysis of the 696 start-ups in the sample (split by an external funding source) suggests substantial boosts in both cooperative activity associated with VC-backed firms and in the likelihood of an initial public offering.

Suggested Citation

  • David H. Hsu, 2006. "Venture Capitalists and Cooperative Start-up Commercialization Strategy," Management Science, INFORMS, vol. 52(2), pages 204-219, February.
  • Handle: RePEc:inm:ormnsc:v:52:y:2006:i:2:p:204-219
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    File URL: http://dx.doi.org/10.1287/mnsc.1050.0480
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    References listed on IDEAS

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