Lecture 11

Question 1

Belbin’s Team Roles

Answer 1

1. Thinking: plant, monitor-evaluator, specialist
2. People: coordinator, team-worker, resource investigator
3. Actions: shaper, implementer, completer

Question 2

Selection and Valuation of Venture Financing

Answer 2

A typical investment decision involves initial screening, information gathering, the assessment of risk, and the evaluation of target entrepreneurial companies.

• VC investments are characterized by high risk duo to illiquidity. volatile returns and lack of information

Question 3

How to get better at selecting venture? (Yang, Narayanan & Zahra, 2009)

Answer 3

• Experience
• Diversity (stage diversity and innovation, industry diversity and IPO)
• Uncertainty negates some of these effect

Question 4

The Dilemma of Autonomy versus Coordination (Puranam, Singh & Zollo, 2006)

Answer 4

Autonomy
- Freedom to experiment and innovate
- Not bound by bureaucratic corporate culture
- Prevents corporate employees from impeding the developing of competing technologies

Coordination
- Start-up may use corporate’s knowledge, experience, and capabilities
- Benefits the corporate: the firm can only learn when knowledge is exchanged
- Not only more knowledge exchanged, but also makes sure this ends up in the right place (business units)

Question 5

(Corporate Venturing) Portfolio thinking

Answer 5

• Includes multiple ties with different ventures
• The success of failure of a single venture is not important to the incumbent firm, but the corporation is able to achieve its goals related to the entire corporate venturing portfolio

Question 6

Portfolio diversity

Answer 6

The average extent to which ventures in an investor’s corporate venturing portfolio are dissimilar from other ventures within the portfolio

Question 7

Typical investment decision

Answer 7

Involves initial screening, information gathering, the assessment of risk, and the evaluation of target entrepreneurial companies.

Question 8

The case for autonomy

Answer 8

1. Freedom to experiment and innovate
2. Not bound by bureaucratic corporate culture
3. Prevents corporate employees from impeding the developing of competing technologies

Question 9

The case for coordination

Answer 9

1. Start-up may use corporate’s knowledge, experience, and capabilities
2. Benefits the corporate: the firm can only learn when knowledge is exchanged
3. Not only more knowledge exchanged but also makes sure this ends up in the right place

Question 10

Funding: seed stage

Answer 10

Investments that require funding for product development and team expansion.

Question 11

Funding: scaling stage

Answer 11

Investments that require funding primarily to scale-up their business

Question 12

Swimming with sharks dilemma

Answer 12

The choice for a young firm/start-up between a dangerous partner with attractive resources, or a safer but less attractive partner.

Question 13

Diversity on Innovation Performance

Answer 13

Wadhwa, Phelps & Kotha (2016)

Diversity had an inverted U-shaped effect on Innovation performance
> New-knowledge versus the complexity of integrating new knowledge

Question 14

Diversity on Financial performance

Answer 14

Yang, Narayanan & De Carolus (2014)

Diversity has a U-shaped relationship with Financial Performance
> Risk reduction benefits versus Redeployment of resources and relevant experience

Question 15

How can corporate ventures outperform others?

Answer 15

Park and Steensma (2013)
- CVCs tend to elect more innovative ventures, and then nurture them specifically towards higher innovative performance (especially when the investor has more of a say in the investment syndicate

Baum and Silverman (2004); Chemmanur et al. (2011); Sorenson (2007)
- (C)VCs can thus act as both a ‘scout’ and a ‘coach’

Question 16

Nature vs Nurture venturing

Answer 16

Nature: selecting the right ventures pre-investment
Nurture: developing and growing the venture post-investment

Question 17

Is nature or nurture more important in predicting the success of a venture?

Answer 17

Bertoni, D’Adda & Grilli (2016)
- Europe (more sparsely populated VC-areas): best start-ups may skip VC funding altogether (so the other way around: VCs actually pick startups in need for help).
- More experienced VCs: outperform when it comes to both selecting and nurturing, where selecting has double the impact on IPO of the start up

Question 18

Real Options Theory

Answer 18

An initial CVC Investment gives the option to acquire the company when It successfully develops

Question 19

Misappropriation (Anton & Yao, 1994; Knoben & Bakker, 2018)

Answer 19

1. A start-up having a valuable asset
2. The start-up forming a tie with an incumbent to commercialize this asset
3. The incumbent having the ability to utilize this asset without relying on the start-up

Question 20

How to avoid misappropriation

Answer 20

1. Intellectual Property Protection (IPP)
2. Secrecy and Timing: do not disclose information until a later stage
3. Social Defenses: bring along a third party chaperone.