Venture Capitalists and Cooperative Start-Up Commercialization Strategy

I examine 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 and/or technology licensing) relative to a comparable set of start-ups, and with what consequences? To address these questions, I assemble a novel dataset that matches firms receiving a federal research and development subsidy through the Small Business Innovative Research program to VC-funded firms by observable characteristics in five technology-intensive industries. This method helps decouple cooperative activity resulting from start-up development associated with the passage of calendar time from that due to association with VCs. An analysis of the 696 start-ups in the sample (split by external funding source) suggests substantial boosts in cooperative activity associated with VC-backed firms, as well as a number of start-up performance implications