University Venture Capital – The Promise and Pitfalls of University Direct Investments
37 Pages Posted: 17 Mar 2022
Date Written: January 24, 2022
Abstract
Over the past three decades, universities in industrialized countries have become increasingly active as venture capital financiers. Here, we analyze if investments in university-affiliated portfolio companies, in the form of an institutional-personal relation between the university and the founders, are a commercially successful investment proposition. We use a hand-collected data set of 706 university portfolio companies in the United States and the United Kingdom to extend previous case-based evidence that investments in faculty- and student-led start-ups are an elusive promise that rarely pays off commercially. Furthermore, we provide evidence that geographic proximity to a top venture capital ecosystem is a highly performance-relevant characteristic for university investors.
Keywords: Venture Capital, University Investors, University Spin-offs, University Technology Transfer
JEL Classification: G11, G24, M13, L26
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