Geographic and Industrial Concentration of Corporate Venture Capital Portfolios

• In Event: Sociology of Economics

Abstract

There is a small body of literature on geographic and industrial concentration of venture capital (VC) portfolio but no specific research on that of corporate venture capital (CVC) portfolio. However, it is meaningful to distinguish CVC from independent VC firms. First, CVC themselves are geographically more spread than independent VC since they are most likely to locate together with their parents; therefore the geographic diversity of CVC portfolio can be quite different from that of independent VC. Second, as a VC arm of an established firm, CVC has a special set of knowledge and information in certain industries, which independent VC firms do not possess, in the first place. Moreover, the orientation of CVC—whether it is strategic- or financial-oriented—has an impact on its geographic and industrial diversification. While strategic-oriented CVCs would have a more industrially concentrated portfolio around their major business line, financial-oriented CVCs would have a more geographically concentrated one for monitor convenience.

Author

• Dadao Hou, Texas A&M University