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Open business models and venture capital finance

Author

Listed:
  • Massimo G. Colombo
  • Douglas Cumming
  • Ali Mohammadi
  • Cristina Rossi-Lamastra
  • Anu Wadhwa

Abstract

We investigate the differences in venture capital (VC) governance of investee firms with Open Business Models, specifically Open Source Software (OSS), versus closed business models. Due to OSS’s pronounced complexity and uncertainty, we conjecture that VC-backed OSS firms are more frequently staged and syndicated. We present robust empirical evidence from the United States that OSS ventures have more financing rounds and are more likely to be syndicated, and mixed evidence that OSS ventures have a larger number of syndicated investors.

Suggested Citation

  • Massimo G. Colombo & Douglas Cumming & Ali Mohammadi & Cristina Rossi-Lamastra & Anu Wadhwa, 2016. "Open business models and venture capital finance," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 25(2), pages 353-370.
    • Handle: RePEc:oup:indcch:v:25:y:2016:i:2:p:353-370.
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    File URL: http://hdl.handle.net/10.1093/icc/dtw001
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    Cited by:

    1. Marta Ortiz-de-Urbina-Criado & Juan-José Nájera-Sánchez & Eva-María Mora-Valentín, 2018. "A Research Agenda on Open Innovation and Entrepreneurship: A Co-Word Analysis," Administrative Sciences, MDPI, vol. 8(3), pages 1-17, July.
    2. Wong, Yuet-Yee, 2024. "A dynamic duration approach to venture capital exit," Finance Research Letters, Elsevier, vol. 68(C).
    3. Veronika Ruthensteiner & Karl-Heinz Leitner, 2025. "The role of human and financial capital in the business model design-performance relationship: evidence from Austrian start-ups," International Entrepreneurship and Management Journal, Springer, vol. 21(1), pages 1-25, December.
    4. Meeta Dasgupta, 2023. "Open vs Closed Business Model: Exploring Its Role in Innovation in Indian Small and Medium Enterprises (SMEs)," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4973-5002, December.
    5. James Bort & Azzurra Meoli & David W. Sullivan, 2024. "Financing A Free-for-All: Crowdfunding Open-Source Software," Small Business Economics, Springer, vol. 63(4), pages 1449-1469, December.

    More about this item

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L17 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Open Source Products and Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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