Determinants of Companies' Involvement into Venture Capital Investment in Developed Countries

<p>Venture investments have become an important driving force of economic growth and development for 50 years of their existence. Large corporations have long been involved into venture investing. Corporate venture investments rose almost twenty-fold since the emerging of first corporate venture fund. Considering the decision of the corporation to invest money to a particular project, it is the issue of high interest to determine, what the motives of such a decision are. Therefore, the principal aim of this study is to identify the determinants of corporate venture investments. In order to achieve this research objective, it is necessary to analyze the existing theoretical and empirical studies regarding determinants of corporate venture investment, to analyze present market environment, to define the methodology of the research, to empirically test the impact of different factors on corporate venture investment.</p><p>According to the existing empirical researches, there are two different approaches to investigate determinants of corporate venture investments: micro and macro. For the purpose of this study, it is decided to use two groups of explanatory variables, i.e. determinants of corporate venture investments. The dependent variable is the volume of investments by the corporation in a portfolio company. The volume of investment is considered as the proportion of the investor&rsquo;s maximum amount, which can be possibly invested in a single venture.</p><p>As determinants of corporate venture investments such factors as market size, industry growth rate, industry relatedness of the corporation and the start-up, R&amp;D expenditures, financial leverage and stage of investment are considered.</p><p>All the hypotheses are tested with the use of OLS regression model and Tobit-model. First, the model, including all the considering factors, is build and estimated. Then, in order to make the analysis more detailed, total sample is divided into two parts regarding the stage of investment. For each stage the influence of all factors is investigated. Chow test is used to check two parts of sample on the homogeneity.</p><p>The investigation of factors, influencing corporate venture investments, is carried out using the&nbsp; microlevel data set. The sample includes 77 observations about corporate venture capital, invested in a single venture by a focal corporation from developed countries. The considering period covers 5 years, from 2008 till 2013.</p><p>According to the results of OLS regressive analysis the influence of all considering factors is significant. Then the hypotheses are tested with the help of Tobit-model. Results of Tobit regression are almost equivalent to those, obtained during the OLS analysis.</p><p>Nearly all the hypotheses are not rejected after regressive analysis. The investigation of influence of all the factors on total sample and two part of the sample regarding stage of investment gives different results, what is an interest case study. There are different determinants of corporate venture investments for different stages of investment.</p><p>The current paper continues the existing researches of corporate venturing. It contributes to the broader base of literature and has practical value for Russian market of venture investments and scientific-research centers, which study the problem of venture investments.</p>