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The Impact of Venture Capital on Innovation: Beyond Portfolio Companies

The Palgrave Encyclopedia of Private Equity

Synonyms

Business continuation; Business growth; Due diligence; Entrepreneurial constraints; Entrepreneurship; Innovation; Private equity; Venture capital

Definition/Description

The thrust of research on the relationship between venture capital and innovation focuses on venture capitalists’ ability to pick winners and add value to their portfolio companies (i.e., the companies in which they invest). This entry expands the scope of research on the economic contribution of venture capital by reviewing emerging studies on how the due diligence process that venture capitalists conduct adds value to a wider set of companies; the approximately 30 out of 100 they consider for investment, rather than the 1 out of 100 in which they ultimately invest. Initial findings offer a rough estimate that due diligence value-add to nonportfolio companies can be as large as half of its investment value-add to portfolio companies.

Introduction

Venture capital (VC) investors have financed some of the world’s...

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Author information

Authors and Affiliations

  1. Department of Finance, London School of Economics and Political Science, London, UK

    Juanita Gonzalez-Uribe

  2. Department of Strategy, International Management and Entrepreneurship, King’s Business School, King’s College London, London, UK

    Robyn Klingler-Vidra

Authors
  1. Juanita Gonzalez-Uribe
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  2. Robyn Klingler-Vidra
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Corresponding author

Correspondence to Juanita Gonzalez-Uribe .

Editor information

Editors and Affiliations

  1. HHL Leipzig Graduate School of Managemen, Leipzig, Sachsen, Germany

    Benjamin Hammer

  2. Florida Atlantic University, Boca Raton, FL, USA

    Douglas Cumming

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Gonzalez-Uribe, J., Klingler-Vidra, R. (2023). The Impact of Venture Capital on Innovation: Beyond Portfolio Companies. In: Hammer, B., Cumming, D. (eds) The Palgrave Encyclopedia of Private Equity. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-38738-9_30-1

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  • DOI: https://doi.org/10.1007/978-3-030-38738-9_30-1

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-030-38738-9

  • Online ISBN: 978-3-030-38738-9

  • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

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Chapter history

  1. Latest

    The Impact of Venture Capital on Innovation: Beyond Portfolio Companies
    Published:
    15 August 2023

    DOI: https://doi.org/10.1007/978-3-030-38738-9_30-2

  2. Original

    The Impact of Venture Capital on Innovation: Beyond Portfolio Companies
    Published:
    24 June 2023

    DOI: https://doi.org/10.1007/978-3-030-38738-9_30-1

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