University Venture Capital – The Promise and Pitfalls of University Direct Investments

37 Pages Posted: 17 Mar 2022

See all articles by Maximilian Kremer

Maximilian Kremer

Technische Universität München (TUM) - Center for Entrepreneurial and Financial Studies (CEFS)

Ann‐Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies

Reiner Braun

Technische Universität München (TUM) - TUM School of Management; Center for Entrepreneurial and Financial Studies

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

Suggested Citation

Kremer, Maximilian and Achleitner, Ann-Kristin and Braun, Reiner, University Venture Capital – The Promise and Pitfalls of University Direct Investments (January 24, 2022). Available at SSRN: https://ssrn.com/abstract=4016443 or http://dx.doi.org/10.2139/ssrn.4016443

Maximilian Kremer (Contact Author)

Technische Universität München (TUM) - Center for Entrepreneurial and Financial Studies (CEFS) ( email )

Arcisstr. 21
Munich, 80333
Germany

Ann-Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25181 (Phone)

Reiner Braun

Technische Universität München (TUM) - TUM School of Management ( email )

Arcisstr. 21
Munich, Deutschland 80333
Germany
+498928925181 (Phone)
+498928925188 (Fax)

HOME PAGE: http://www.ef.wi.tum.de/

Center for Entrepreneurial and Financial Studies ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

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