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Formal venture capital acquisition: can entrepreneurs compensate for the spatial proximity benefits of South East England and ‘star’ golden-triangle universities?

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  • Cornelius Mueller
  • Paul Westhead
  • Mike Wright

Abstract

Building on the resource-based view of the firm and signalling theory, we challenge the traditional perspective that spatial proximity benefits can be leveraged by university spin-outs (USOs) located in the South East of England (particularly those drawn from ‘star’ golden-triangle universities with additional reputational benefits), and that USOs located elsewhere will be constrained from obtaining first formal venture capital (VC) required for venture development. With the aid of a longitudinal database of 134 USOs involving unique archival and survey data, event-history analysis identified, counter to the traditional perspective, that USOs located outside the South East of England were significantly more likely to obtain formal VC. Also, counter to the spatial proximity benefits view, star golden-triangle USOs were not significantly more likely to obtain VC. Our evidence supports a spatial mismatch view between investors and investees. Resource-combination signals sent by USOs and favourably received by VC firms were found to differ according to USO location context: USOs located outside the South East of England and star golden-triangle universities that signal the credible presence of habitual founders were more likely to obtain VC. USOs located outside star golden-triangle universities that had previously obtained publicly backed equity finance were also more likely to obtain VC. However, USOs located in the South East of England with reputable management teams were most likely to obtain VC. Keywords: university spin-outs, venture capital, spatial proximity benefits, resources, signalling

Suggested Citation

  • Cornelius Mueller & Paul Westhead & Mike Wright, 2012. "Formal venture capital acquisition: can entrepreneurs compensate for the spatial proximity benefits of South East England and ‘star’ golden-triangle universities?," Environment and Planning A, Pion Ltd, London, vol. 44(2), pages 281-296, February.
  • Handle: RePEc:pio:envira:v:44:y:2012:i:2:p:281-296
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    1. repec:eee:respol:v:46:y:2017:i:8:p:1490-1504 is not listed on IDEAS
    2. Einar Rasmussen & Paul Benneworth & Magnus Gulbrandsen, 2013. "Scoping paper: Developing University Innovation Capacity: How can innovation policy effectively harness universities’ capability to promote high-growth technology businesses?," Working Papers on Innovation Studies 20131007, Centre for Technology, Innovation and Culture, University of Oslo.
    3. Clarysse, Bart & Wright, Mike & Bruneel, Johan & Mahajan, Aarti, 2014. "Creating value in ecosystems: Crossing the chasm between knowledge and business ecosystems," Research Policy, Elsevier, vol. 43(7), pages 1164-1176.
    4. Larsson, Johan P & Wennberg, Karl & Wiklund, Johan & Wright, Mike, 2017. "Location Choices of Graduate Entrepreneurs," Ratio Working Papers 290, The Ratio Institute.
    5. Einar Rasmussen & Mike Wright, 2015. "How can universities facilitate academic spin-offs? An entrepreneurial competency perspective," The Journal of Technology Transfer, Springer, vol. 40(5), pages 782-799, October.

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