TOWARDS A MODEL OF CORPORATE VENTURE CAPITAL INVESTMENT DECISION-MAKING

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TOWARDS A MODEL OF CORPORATE VENTURE

CAPITAL INVESTMENT DECISION-MAKING

Abstract: This master thesis analyses the investment process and the investment criteria that

corporate venture capitalists use in their decision-making. Using a single case-study approach, three managers and one investment director from a corporate venture capital unit in the Netherlands were interviewed during first-, and second round interviews. Document analyses provided additional insights into the investment criteria being used during the process. The study puts forward a six-stage investment process model of corporate venture capital investment, which differentiates from the investment process of other capital investors, like business angels and venture capitalists. Furthermore, this research reveals new investment criteria that impact the investment decision of corporate venture capitalists.

Keywords: Corporate venture capital, investment process, investment criteria

Document: Master Thesis

Author: Geoffrey Mark Thodé

Student number: S2390353

Faculty: Economics & Business

Master: MSc. Business administration

Department: Small Business & Entrepreneurship

Supervisor: dr. ir. Haibo Zhou

Co-assessor: dr. Clemens Lutz

Date: 4th_{of May 2015}

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3.2 CRITERIA RESEARCH ... 18 3.2.1 Investment objectives ... 19 3.2.2 Investment criteria ... 20 3.3 CONCLUSION ... 21 4. METHODOLOGY ... 22 4.1 RESEARCH DESIGN ... 22 4.2 CASE DESCRIPTION ... 22 4.3 TRIANGULATION... 23 4.3.1 Literature review ... 23 4.3.2 Qualitative interviews ... 23 4.3.3 Document analysis ... 24

4.4 RELIABILITY, OBJECTIVITY AND REPEATABILITY ... 25

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5.1.4 Negotiation ... 33

5.1.5. Due diligence ... 33

5.1.6. Contract ... 34

5.2 INVESTMENT CRITERIA ... 35

5.2.1 Rejected after deal screening ... 35

5.2.2 Rejected after deal evaluation ... 40

6. DISCUSSION ...41

7. CONCLUSION ... 44

8. IMPLICATIONS AND FUTURE RESEARCH ... 45

9. REFERENCES ... 46

APPENDIX 1. INTERVIEW GUIDE ... 50

APPENDIX 2. INTERVIEW ... 52

APPENDIX 3. INTERVIEW TRANSCRIPTS (1ST_{ROUND) ... 53}

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1. Introduction

Corporate venture capital (CVC) is defined as a minority equity investment by a non-financial corporation in a privately held entrepreneurial venture (Dushnitsky, 2012). CVCs invest in entrepreneurial ventures for a number of reasons. Some CVCs make investments for financial reasons. This occurs when established firms seek to gain higher returns from their investments. However, the majority of CVCs invest because of their strategic objectives (Keil, 2002; Chesbrough, 2002; Wadhwa & Kotha, 2006). The most common strategic objective is that CVC investments provide a window on innovation and new technologies for the corporation (Gompers, 2002; Dushnitsky & Lenox, 2006). This is in contrast with traditional venture capital (VC) investors, such as pension funds, banks, and insurance companies, who pursue purely financial gains (Dushnitsky & Shaver, 2009). On this aspect CVCs fundamentally differ from VCs.

Given the high risk and the strategic implications of a CVC investment, it is important that the investment decision-making process is executed thoroughly prior to making an investment (Yang, Narayanan & Zahra, 2009). Therefore, it is essential that the CVC has the capability to select the most promising investment opportunities. At the same time a CVC has to eliminate non-viable business opportunities early in the investment process.

1.1 Problem identification

In the last decades, academic interest into CVC has grown substantially (Narayanan, Yang & Zahra, 2009). Topics such as CVC objectives (e.g. Siegel, Siegel & MacMillan, 1988; Basu, Phelps & Kotha, 2011), governance modes (e.g. Rind, 1981; Dushnitsky & Shapira, 2010), investment relationships (e.g. Maula, 2001; Dushnitsky & Shaver, 2009), interdependencies (e.g. Wadhwa & Phelps, 2009) and performance implications (e.g. Ivanov & Xie, 2010) are thoroughly addressed in the CVC literature. However, the investment process and characteristics of CVC investments is a relatively unexplored area of research (Souitaris & Zerbinati, 2014).

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5 therefore surprising that authors in the CVC field such as Dushnitsky and Shaver (2009) still refer to investment criteria established almost three decades ago, by Siegel et al. (1988).

The VC literature has established a series of investment stages within the investment process, such as deal origination, screening, and structuring the deal, and subsequently described the different investment criteria that were applied during these stages (Souitaris & Zerbinati (2014). Academic interest in the venture capital literature generally focuses on VCs and business angels (BAs) leaving CVC out of consideration (e.g. van Osnabrugge, 2000). Souitaris, Zerbinati and Liu (2012), acknowledge this lack of attention for CVCs by stating that: “the literature lacks detailed accounts of [CVCs] practices” (p. 480).

The work of Souitaris and Zerbinati (2014) is a step in the right direction to get a better understanding of the CVC investment practices. They found unique practices that CVCs applied in the deal origination stage, screening stage, deal evaluation and due diligence, and post-investment activities. These practices were carried out by CVCs but not by VCs. Their results indicate that the investment process as a whole could deviate from VCs. Perhaps due to the absence of a CVC investment process model, the authors explain their results in the light of the investment process of VCs. Additionally, a limitation of existing VC investment models is that it is usually portrayed as a sequential process. However, Silva (2004) finds that the actual VC process is far more dynamic.

The goal of this master thesis is to add to the relatively little body of the CVC investment process. First, it answers the calls from Souitaris and Zerbinati (2014) who posit that it is still not known whether fine-grained differences exist between VCs and CVCs in how they generate, screen, and evaluate investment deals. Second, the majority of the available literature on CVC is based on data from the United States and the United Kingdom (Ivanonv & Xie, 2010; Weber & Weber, 2005). This leaves room for research on CVC in other countries in the world. This thesis addresses this issue by investigating CVC practices in the Netherlands.

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6 An empirically established process model has several advantages for the stakeholders involved in the investment process (Paul et al., 2007). First, it provides an enhanced understanding of which factors generally lead to successful investments. Second, it will help the investor and investee appreciate the other party’s concerns in the process of reaching an investment. Third, entrepreneurs will benefit, since they will have a better understanding of how CVCs assess their investment proposals, which could lead to a better quality of investment proposals. Finally, it allows for a comparison of the investment practices from other capital investors.

1.2 Research questions

This thesis poses a main research questions that is designed to establish a better understanding of how CVCs make capital investments:

How do corporate venture capitalists make capital investments and how does this differ from traditional venture capitalists and business angels?

In order to answer the main research question, it is important to establish a better understanding of what investment practices really are. Therefore, the main research question will be answered by the following two sub-questions:

1. How is the investment process of corporate venture capitalists structured?

2. Which investment criteria do corporate venture capitalists use to assess investment opportunities?

1.3 Thesis outline

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2. Background

In this chapter, I will address the background and the current state of CVC investment and put it in an international context. Chapter 2.1 shows how the CVC market has shifted and developed over time. Chapter 2.2 presents the increasing interest in CVC in the European market, thereby showing the need for research on CVC in the European Union. Finally, in chapter 2.3 I show that this research approaches CVC from a private equity perspective, since the scope of this research lies on comparing investment practices of CVC with equity investors.

2.1 Development of corporate venture capital

To understand the current position of CVC it is important to understand the development of the industry over time. The nature of CVC investments has been cyclical and mirrored the ups and downs of the VC industry (Gompers & Lerner, 2000). To date we witnessed three past waves of CVC and are currently amidst of the fourth, each of which is marked by specific characteristics (Dushnitsky, 2012).

The first CVC wave has its origins in the mid-1960s in the United States. There were three major trends that explained this interest in corporate venturing (Dushnitsky, 2012); corporations had excess cash to invest during this time of economic growth. Second, corporations recognized the financial success of the traditional VCs. Finally, there was an overall trend towards business diversification. Until the economic recession in 1973, more than 25 per cent of fortune 500 companies started to experiment with corporate venture capital programs (Morris, Kuratko & Covin, 2008). The collapse of the financial market brought an abrupt end to the investment market, including CVC investments.

The second wave of CVC started in the early 1980s and was characterized by corporate investments in the developing technology industry (Birkinshaw et al., 2002). The collapse of the stock market in 1987 led to a significant decrease of the venture capital market. CVC investments declined even more dramatically (Gompers & Lerner, 1998).

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8 (Dushnitsky, 2012). However, the dot-com bubble in 2001 caused CVC investments to fall dramatically and by the end of that year, 45 per cent of the CVC programs that were active in 2000 had been closed (Garvin, 2002).

The final current wave of CVC is characterized by some major structural changes (Dushnitsky, 2012). Large corporations see the strategic benefits of CVC investing and start to increasingly adopt CVC programs within their organizations. Dushnitsky (2012) states that organizations start to incorporate CVC programs as a fundamental part of their innovative strategies. Gompers and Lerner (1998) showed that the lifespan of CVC programs also starts to increase. In the past CVC programs were quickly eliminated when there were no short-term gains. The average CVC program ran for about three years. Nowadays, the average CVC program exists four years or longer.

Souitaris and Zerbinati (2014) postulate that the main difference between the current, fourth wave of CVC and the previous third wave, is that CVCs enjoy more legitimacy. This is the case because there seems to be more awareness of the existence and the benefits of CVCs for entrepreneurs.

2.2 The CVC industry in an international context

Since the majority of research on CVC is done outside of the European Union (Weber & Weber, 2005), it is important to address the CVC industry from an international perspective. Ever since its origination, CVC has been well developed in the United States. Looking at the data from Dushnitstky (2012), the United States is still home to the most CVC programs compared to the rest of the world (Fig. 1 & Fig. 2). However, other nations, including some nations in the European Union are starting to develop more CVC programs. From 1991 to 2001 CVC programs in Europe accounted for a total of 3 per cent of the global CVC programs (Germany, the U.K., and Sweden).

From 2001 till 2009 we see an increase of the CVC programs based in Europe. Germany, the United Kingdom, the Netherlands, France and Switzerland, are the hosting countries for 7 per cent of the total global CVC programs. This shows that the CVC industry is rising in Europe. Since this research will be conducted at a CVC program based in the Netherlands, it is relevant to indicate magnitude of the current Dutch CVC market. Unlike the developed CVC market in the United States, CVC has only recently begun to develop in the Netherlands. While there is no public evidence of when CVC originated in the Netherlands, the earliest public data on CVC of the Dutch venture capital association (NVP) goes back to 2007. The size of the CVC

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9 United states 83% Japan 5% Canada 3% South Korea 1% Germany 1% U.K._1% Singapore 1% Hong Kong 1% Sweden1% Rest of the world 3% United states 78% Japan 2% Canada 6% South Korea 2% Germany 2% U.K. 2% Singapore 1% Hong Kong 1% Netherlands 1% Israel_1% China 1% France 1%Switzerland 1% Rest of the world 1% 13,4 14,0 10,4 12,4 16,8 9,7 15,3 7 12 6 14 24 16 17 0 5 10 15 20 25 30 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 2007 2008 2009 2010 2011 2012 2013 N um be r of i nv es tm ent s T ot al a m oun t i nv es te d ( x € 1 00 0)

Total amount invested (x € 1,000) Number of CVC investments

Figure 1. Countries of origin of CVC programs Figure 2. Countries of origin of CVC programs 1991 – 2001 (derived from Dushnitsky, 2012) 2001 – 2009 (derived from Dushnitsky, 2012)

industry in the Netherlands is depicted in figure 3. As can be seen, the absolute amount of investments has been relatively stable; but the number of investments has increased from 7 investments in 2007 to 17 investments in 2013. In 2007, CVCs invested a total of 13.4 million Euros and in 2013 15.3 million Euros was invested. The data shows that CVCs invest smaller amounts, but spread this over more investments. At the time of writing, no statistical data for 2014 is available.

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2.3 Corporate venture capital research streams

For this thesis, it is important to differentiate between the two different research perspectives that can be observed in the literature. One stream of research looks at CVC as a very distinctive form of private equity investments (e.g. Siegel, et al., 1988; McNally, 1997). This approach implies that CVC investments can be seen as a form of VC investments (Fig. 4).

Private equity industry

Management buy-outs Expansion capital

Venture capital industry

Informal Venture Capital (BA) Institutional Venture Capital (VC)

Corporate Venture Capital (CVC)

Figure 4. CVC in the context of private equity investments in Europe (Based on European Commission, 2006)

Another stream of research has approached CVC from the perspective of entrepreneurship, more specifically, corporate entrepreneurship (e.g. Sharma & Chrisman, 1999; Morris, Kuratko & Covin, 2008). From this perspective CVC plays a role in the entrepreneurial process of large organizations (Fig. 5). In this context CVC is part of a corporate’s innovative activities (Dushnitsky, 2006). Entrepreneurship Independent Entrepreneurship Corporate Entrepreneurship Innovation Strategic Renewal Corporate Venturing Internal Venturing External Venturing Venturing alliances Transformational arrangements

Corporate Venture Capital

Figure 5. CVC in the context of entrepreneurship (Based on Keil, 2000; Sharma and Chrisman, 1999).

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3. Literature review

This chapter presents the literature review of this thesis. In chapter 3.1, I will review the empirical literature regarding the stages in the investment process of equity investors. In chapter 3.2, the empirical literature regarding the investment criteria of CVCs is reviewed.

Research on investment decision-making of capital investors can be categorized into two broad categories: ‘processual research’ and ‘criteria research’ (Silva, 2004). First, ‘processual research’ aims at understanding the different events that occur during an investment appraisal (e.g. Tyebjee & Bruno, 1984; Wright & Robbie 1998; Paul et al, 2007). This stream of research has resulted in several investment models, explaining the investment process in a number of different stages. While the identified stages differ, researchers agree that 1) the investment process consists of multiple stages and 2) the evaluation of deals involves a minimum of two stages: deal screening and deal evaluation (Hall & Hofer, 1993).

The second stream of research on investment decision-making is ‘criteria research’ (Silva, 2004). It aims at understanding the criteria used during the course of the decision-making (e.g MacMillan et al., 1985; Hall & Hofer, 1993). This stream of research has resulted in a wide variety of studies ranking investment criteria based on their importance (Silva, 2004). Studies include MacMillan et al. (1985), Hall and Hofer (1993), Weber and Weber (2005).

Most of the studies can be positioned in either one of the two research streams (Silva, 2004). However, some authors combine the two, producing a holistic overview of the investment process and the criteria applied during the process (e.g Fried & Hisrich, 1994; Boocock & Woods, 1997). Silva (2004) proceeds that a comprehensive understanding of the investment process is reached if both areas are addressed simultaneously.

This current study applies this comprehensive approach, studying both the investment process and identifying the most important investment criteria of CVCs. In the next section, I will review the literature from a processual perspective of decision-making. Thereafter I will review the literature on criteria research.

3.1 Processual research

As explained earlier in the introduction, a holistic CVC investment model seems to be absent in the literature. However, the majority of research on the CVC investment process has explained the different activities based on the individual stages of the investment process. In this section, I will discuss the investment stages as stated in the VC literature.

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12 VCs from a processual perspective were Tyebjee and Bruno (1984). They used a questionnaire and telephone interviews to validate a framework of VC investment activities. They found that the investment process consists of five sequential stages namely: 1) Deal origination, which constitutes the efforts of looking for prospective investment deals. 2) Deal screening, applying investment criteria to reduce the number of investment deals to a more manageable subset for a more in-depth evaluation. 3) Deal evaluation, during which the venture is assessed in more detail, weighing the risks and expected returns. 4) Deal structuring, in which the negotiations take place, the equity stake is determined and contracts are formalized. 5) Post-investment activities, which involve all the VC efforts in assisting the venture realizing growth. Such as appointing executives, and providing additional finance and services. The stages one through four represent the VCs pre-investment activities, which is the scope of this master thesis. Wright and Robbie (1998) agree with Tyebjee and Bruno (1984) and also found that the investment process consists of these five stages.

In his unpublished doctoral dissertation, Hall (1989) interviewed VCs to identify eight stages of the VC investment process. Unfortunately, this dissertation was not accessible to the author of this thesis, but based on the accounts of Hall and Hofer (1993) the stages can be reviewed. After generating deal flow, the VC conducted a quick proposal screening. Next, a more thorough proposal assessment was conducted to select the most viable proposals. The project evaluation was used to get to know the venture and entrepreneur(s) in more detail. If the venture passed through this stage, a due diligence was executed leading to the decision to invest. Once the VC has made the investment decision, a meeting was arranged to structure the deal to make the investment official. Then the post-investment activities commenced: venture operations and cashing out.

Fried and Hisrich (1994) developed a framework of the VC pre-investment by using a case study. Their investment framework consists of six pre-investment activities; origination, VC firm specific screen, generic screen, first-phase evaluation, second-phase evaluation, and closing. Both Tyebjee and Bruno (1984), and Fried and Hisrich (1994) study the investment process from the supply side of VC and result in similar conclusions (Paul et al., 2007).

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13 Paul et al., (2007) studied the investment process of BAs. They found that business angels perform six pre-investment activities; learning about the opportunity, meeting the entrepreneur, initial screening, detailed screening, deal structuring, agreement. However, although the names deviate from the VC investment process, there are some similarities, as well as differences between the process of Bas and CVCs. The most apparent difference is that Paul et al., (2007) do not identify a deal evaluation stage. However, they state that during the deal structuring stage, the due diligence activities are conducted. Paul et al., (2007) explain this by stating that the due diligence of a BA investment is not a formalized process and is usually executed by the BA themselves. The pre-investment activities of studies mentioned above are depicted in table 1.

Souitaris and Zerbinati (2014) are one of the first authors who document and explain certain “aspects of the CVC investment process that diverge from standard practices of [VCs]” (p. 321). Due to the absence of a CVC model, they used the VC model of Tyebjee and Bruno (1984) as their starting point. Although not developing an investment model, they did find discrepancies in the deal origination, deal screening, evaluation and due diligence, deal structuring and approval and post-investment practices. For this reason I will proceed by drawing up on the investment process models established in VC and BA literature. Where possible I will refer back to findings about the CVC investment process.

3.1.1 Deal origination

Deal generation involves the collective efforts of establishing proper sources of investment referrers, which results in a stream of investment opportunities (Hudson & Evans, 2005). In the deal origination stage VCs get access to potential deals from three different sources (Tyebjee & Bruno, 1984). The first source of deals came to the attention of VCs as unsolicited calls from the entrepreneurs seeking an investment. The second source of deal origination was through a referral process. With sixty five per cent of the deals being brought to the attention of VCs, this was their largest source of deal origination. Finally, VCs actively search for investment deals by monitoring their environment. VCs attend tradeshows, conventions and conferences to actively search for investable ventures.

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Table 1. Investment process models

Tyebjee & Hall Fried & Boocock & Proimos & Paul Whittam & Bruno (1984) (1989) Hisrich (1994) Woods (1997) Wright (2005) Wyper (2007)

VCs VCs VCs VCs VCs BAs

Pre-investment activities

Deal origination Generating _{deal flow} Origination Generating _{deal flow} Deal sourcing

Learning about the opportunity Meeting the entrepreneur

Screening

Proposal screening VC firm-specific _screen

Screening Screening

Initial screening

Proposal assessment Generic screen Detailed screening

Evaluation

Project evaluation First-phase _evaluation

First meeting

Evaluation

- Second meeting

Due diligence Second-phase _evaluation Board presentation Investment decision Due diligence

Structuring Deal structuring Closing Deal structuring Deal structuring Deal structuring Contracting Agreement

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15 stream of proposals. Fried and Hisrich (1994) showed that most of the business proposals that received an investment came through referrals.

In the deal generation stage a distinction has to be made between the proactive and reactive approaches of VCs generating deal flow (Wright and Robbie, 1998). They state that VCs operating in competitive environments appear to utilize more proactive approaches to generating deal flow (Wright & Robbie, 1998). In his single case study, Silva (2004) finds that in the deal origination stage the VC pro-actively informs potential investees about the type of ventures the VC is looking for. This ‘signalling activity’ is aimed at increasing the number of high quality and relevant proposals for the VC. In addition the VC participates as a judge in business competitions as a way of pro-actively searching for business opportunities. Silva (2004) attributes this proactive behaviour as having “a lack of a strong referral network that could present selected proposals to the [VC]” (p. 138).

Turning to CVC deal origination, Souitaris and Zerbinati (2014) state that referrals from the corporate business units are another source of deals, which is not used by VCs or BAs. This is explained by the fact that these referrals have a high strategic fit with the corporate mother, since the referrers know in which type of business the CVC is interested. Additionally, they state that this form of endorsement contributes to decreasing information asymmetries involved in the deal.

3.1.2 Deal screening

In the deal screening stage, VCs limit the large pool of investment proposals to areas that the VC is familiar with (Hall & Hofer, 1993). By using investment criteria a VC establishes whether or not the deal should be looked into in more detail (Hudson & Evans, 2005). Deal screening gives a VC the opportunity to look for potential deal-breaking characteristics that are unfavourable for an investor. Since most VCs receive a large deal flow, it is important to quickly eliminate weak proposals (Hall & Hofer, 1993), so that the VC can focus its attention on proposals that have a higher probability of success (Proimos & Wright, 2005).

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16 They also, found that the more in-depth proposal assessment is carried out on average of 21 minutes.

Proimos and Wright (2005) continue that the screening stage allows the VC to reduce the effects of information asymmetries. That is minimizing the risk of adverse selection and moral hazard. Adverse selection originated in agency theory and refers to the situation where the principal (investor) has difficulties in ensuring that the agent (investee) has the skills and capabilities required to make the venture a success (van Osnabrugge, 2000). Moral hazard refers to the situation where the investee does not put all his efforts into making the business a success (van Osnabrugge, 2000). This issue is especially applicable to new ventures. Since these ventures are in their early stage, they are generally associated with greater risk and uncertainty than later stage companies. Although it is difficult to assess these issues, since new ventures have not reached many milestones yet, it is important to make a careful assessment on whether or not the entrepreneur is able to continue putting all his efforts into making the venture successful (Yang, Narayanan, Zahra, 2009).

With respect to CVCs, Souitaris and Zerbinati (2014) identified two different practices in CVC deal screening compared to VC deal screening. First, contrary to VCs, CVCs include additional criteria that are related to the strategic fit with corporate parent. Second, due to the large stream of investment proposals, the CVC is able to sense how industries develop and provides this feedback to the parent. This, in turn helps the corporate mother to adapt or align its strategy with its environment.

3.1.3 Deal evaluation

The evaluation stage is regarded as the stage where the business plan is examinated in more detail and where additional data is gathered (Hudson & Evans, 2005). During the first-phase of deal evaluation the VC goes into an in-depth research to find additional information about business opportunity (Fried & Hisrich, 1994, Silva 2004). This stage begins with several meetings with the ‘team’ behind the venture (Boocock & Woods, 1997). This will allow the VC to form an impression of the management and production capabilities. During the second meeting, another manager of the VC fund gathers more information about the venture. This meeting will help to secure the “emotional commitment” to the business opportunity.

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17 feedback, this can be consultants they have worked with, managers of their portfolio companies or other experts who have knowledge about the particular industry.

Fried and Hisrich (1994) suggest that the second-phase evaluation starts when the VC has developed an “emotional commitment” to the proposal. In this stage, the amount of time that is spent on the investment proposal increases tremendously. The major difference between this stage and the prior stage is that the goal has shifted from determining whether the VC has an interest in the deal to determining which obstacles exist and how to overcome these. Also, before entering this stage, the VC usually has a rough understanding of the price and the structure of the deal.

This stage also includes the due diligence, which the VC uses as the basis of putting a valuation on the venture (Wright & Robbie, 1998). This comprises of a thorough analysis of the financial viability and financial projections of the venture (Boocock & Woods, 1997). This will provide the VC with valuable information regarding the business opportunity and subsequently, to make a well informed investment decision. The due diligence is the process that results in the output of the evaluation. Therefore, the due diligence is part of the evaluation stage (Hudson & Evans, 2005).

According to Boocock and Woods (1997), an additional step takes place in the dual evaluation: the presentation to the board. The entrepreneur makes and presents his business plan to the board of directors. The board then decides whether or not to invest in the business. Boocock and Woods (1997) call this “unusual” since VCs typically do not need approval from the board of investors.

Hall & Hofer (1993), emphasize that it is important to make a distinction between deal screening and deal evaluation. That is because VCs apply different investment criteria in these two stages. In the deal screening stage, VCs apply non-compensatory criteria, whereas in the deal evaluation, compensatory criteria might be applied (Hudson & Evans, 2005). Compensatory criteria mean that a high score on a particular criterion can compensate for a low criterion score on the other (Riquelme & Rickards, 1992). Even though the investment criteria in the deal evaluation are the same as in the deal screening they are less subjectively applied, more emphasis is placed on an in depth-analysis as well as the financial forecasts (Riquelme & Rickards, 1992).

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18 can help in creating synergies between the venture and the business units in the future (Hellmann, 2001).

3.1.4 Deal structuring and approval

After the VC has made the decision to invest, the parties are ready to structure the deal (Hudson & Evans, 2005). The deal structuring stage is characterized by negotiation and setting up the formal investment agreement (Tyebjee & Bruno, 1984). The investment agreement serves to formally establish the equity share that the VC receives in return for their investment (Fried & Hisrich, 1994). Furthermore, it portrays the venture’s performance objectives, so that the VC is able to monitor and assess the performance in the future, to see if the predetermined objectives are met.

In addition, the legal documentation is put together and the contracts are being signed, and a ‘term sheet’ is created. This consists of all the terms and conditions that were agreed on during the negotiations (Boocock & Woods, 1997), and that both parties have to comply with in the future after the investment is made (Hudson & Evans, 2005).

VC investors usually have the autonomy to approve investment deals themselves, without interference from the providers of the fund. In contrast, Souitaris and Zerbinati (2014) found that the final deal approval of CVCs typically involves the parent company. They attribute this to three reasons. First, this practice enables the corporation to make sure that the investment has a strategic fit with the company. Second, this shows engagement of the CVC to other parts of the corporation, thereby creating engagement. Finally, it allows the CVC to use the extensive knowledge and expertise of the corporation, to verify that the investment they are making is the right one.

3.2 Criteria research

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3.2.1 Investment objectives

Siegel et al. (1988), pioneered in this area by conducting one of the first comprehensive surveys on CVC practices. In their empirical research, they found that the most important objective of CVCs is return on investment (ROI), followed by exposure to new technologies and markets. This indicates that, the main goals of CVCs are financial objectives. It can be argued whether this finding holds up since the recent literature suggests that CVC programs will ‘…create firm value only when pursued for strategic reasons’ (Dushnitsky & Lenox, 2006; p.769). However, Siegel et al., (1988) note that 42 per cent of the 52 U.S.-based respondents rated ROI as less than essential, while placing emphasis on strategic objectives.

McNally (1997) conducted an extensive study on CVC in the United Kingdom. His results show that 68 per cent of the 28 respondents rank “identification of new markets” as the most important primary objective, followed by “exposure to new technologies” (43 per cent). Other important primary objectives were “financial return on investment”, “develop business relationships” and “identification of new products” all ranking equally with 36 per cent. From this result it is clear that CVCs invest for a number of reasons. However, the opportunity to identify new markets is a strategic objective and by far the most important. This is in contrast to earlier work of Winters and Murfin (1988) who found that internally managed CVC funds invest primarily for financial reasons.

In a more recent global survey, Ernst & Young (2009) offer clear insights on the discussion for which reasons CVCs invest. From the 37 corporate investors they surveyed, 97 per cent said strategic investments are one of the main reasons for investing. Only 3 per cent of the respondents said they invested solely for financial reasons. Compared to their previous CVC survey (Ernst & Young, 2002), the change has been dramatically. In 2002, 67 per cent of the respondents mentioned strategic objectives as one of the investment reasons and 33 per cent of the respondents were solely driven for financial objectives.

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3.2.2 Investment criteria

Naturally, as a result from their investment objectives, investors will develop and implement investment criteria to assess investment opportunities. In this section I will discuss the empirical literature on which investment criteria investors use to assess investment deals.

According to Tyebjee and Bruno (1984), VCs apply different investment criteria in the deal screening stage than in the deal evaluation stage. First, in the deal screening stage, they found that VCs apply four broad screening criteria: ‘The size of the investment and the investment policy of the venture fund’; ‘the technology and market sector of the venture’; ‘the geographic location of the venture’; and the ‘stage of financing’. These generic criteria are used to make a rapid selection of viable investment proposals.

Second, the deal evaluation stage is designed to subjectively assess the investment opportunities on their potential. Tyebjee and Bruno (1984) found 23 deal criteria that could be categorized into five basic underlying dimensions: market attractiveness; product differentiation; managerial capabilities; environmental threat resistance; and cash-out potential. They ranked the criteria ‘management skills’, ‘market size/growth’, and rate of return as the most important investment criteria, in that order.

In their empirical work, Siegel et al., (1988) were one of the first researchers to rank investment criteria for CVCs. They found that criteria related to the entrepreneur, such as ‘capability of sustained effort’ and ‘familiarity to the market’ outweighs criteria related to market, product or financial considerations. Furthermore, CVCs consider ROI and liquidity to be less essential than do VCs. They conclude that CVCs are even willing to sacrifice entrepreneurial and financial quality criteria to achieve a strategic fit for the mother company.

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21 Weber & Weber (2005) used a questionnaire to identify the most important investment criteria of 20 CVCs in Germany. The most important criterion was the ‘uniqueness or innovativeness’ of the product. This was followed by ‘management’s ability to attract and retain highly qualified employees’. ‘Expected return at the point of exit’ was the third most important criteria, together with ‘management’s knowledge of the market’ and the ‘quality of the team’s leadership’.

3.3 Conclusion

To conclude, chapter 2 has shown the magnitude of CVC investment in the Netherlands, and in an international context. Thereby showing the need for research on CVC investment in other countries than the U.S. and the U.K Also, it was established that for this research CVC will be assessed from a private equity investment perspective, since the findings will be compared to research on other equity investors.

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4. Methodology

In this chapter I will describe the methodology that was used in this research. The research question and its sub questions are investigated by means of a single case study. Chapter 4.1 explains why this type of research was chosen. Section 4.2 contains a description of the characteristics of the CVC program that participated in this research. Next, in chapter 4.3, the chosen method of triangulation will be elaborated in more detail. Furthermore, this section provides a description of the three data sources that were used to answer the research questions; literature review, interviews and document analysis. Section 4.4 shows how this study takes into account the reliability issues, objectivity and the repeatability of this study. Chapter 4.5 shows how the collected data will be analyzed. Since the collected data in this research is considered to be confidential, the chapter concludes with a short note on the ethical code in section 4.6. Finally in section 4.7 the limitations of this study will be addressed.

4.1 Research design

This research aims at getting insights on the investment process of CVCs. Since there appears to be a lack of research on this topic, it can be considered a relatively new phenomenon. Robson (2002) refers to this type of research as an exploratory research. The research design in such a study is aligned with the research questions in order to gain a better understanding of the objectives of the study (Yin, 2014).

Company X is the principal of this study. For this reason a single case study appears to be the most appropriate research method. A case study is defined as a research technique that encompasses empirical investigation of phenomena in a real-life context, drawing up on several sources of data (Robson, 2002). Saunders, Lewis and Thornhill (2009) suggest that a single case study helps to explore theories in a corporate setting. However, it is necessary to build on several data sources to create a valid framework. Data resources can include a wide variety of interview techniques, document analyses and other sources of data. Both, Robson (2002) and Saunders, et al., (2009) state that the use of several sources is most favorable for a valid research method. Yin (2014) refers to this method as triangulation.

4.2 Case description

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4.3 Triangulation

Using the triangulation approach, this research combines three qualitative data sources; a literature review, qualitative interviews and document analysis. Yin (2014) states that the sources can be compared to each other to see whether differences or similarities exist. When the conclusions are similar research validity is reached. By applying this technique, this thesis aims at providing a valid framework from which strong conclusions can be drawn. Furthermore, triangulation makes sure that the researcher does not limit his view, but rather investigates from a broader perspective on the case (Yin, 2014).

4.3.1 Literature review

The literature review in the previous chapter used the VC literature as a starting point to establish a basic understanding of investment processes. In addition, the literature of CVC investment criteria enabled me to review the criteria that were found in previous research. The literature review serves as the foundation of triangulation in this research. This way of theoretical triangulation is used to strengthen the validity.

4.3.2 Qualitative interviews

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24 Qualitative interviews were held with all, but one of the staff members of the Company X division, since they are the ones that execute the investment process and apply the investment criteria to the business proposals. Table 2 presents an overview of the interviewees. The interview guide can be found in appendix 1. The interview questions can be found in appendix 2. The evidence regarding the first research question was gathered through four 1st_round interviews, with four staff members. The evidence regarding the investment criteria was captured by document analysis and two 2nd_{round interviews. All data collection took place at the} corporate headquarters on the 17th _{of December 2014, the 20}th_{of February 2015 and the 23}rd_of February 2015.

Table 2. Interviewees

_{Job position} First-round interview

(Investment process)

Second-round interview (Investment criteria)

Interviewee 1 Resigned investment manager X X

Interviewee 2 Investment manager X X

Interviewee 3 Interim investment manager X

Interviewee 4 Investment director X

4.3.3 Document analysis

A total of 16 investment proposals were assessed for the document analysis. Besides the literature review and the interviews this third data source, allows for triangulation and provides a deeper understanding of the criteria that are used by Company X to assess investment proposals. Table 3 provides an overview of the investment proposals analysed in this study.

Table 3. Proposals analyzed in this study

Proposal Business/Product Page Financing stage Decision

1 Educative tracking app for parents and teachers 10 Start-up Rejected after deal evaluation 2 Educative game app for children 35 Later-stage venture Rejected after deal evaluation 3 Peer 2 peer car rental platform 2 Later-stage venture Rejected after deal evaluation 4 Online product search and compare website 26 Later-stage venture Rejected after deal evaluation

5 Multichannel Network 50 Start-up Rejected after deal evaluation

6 Online platform for educative apps 15 Start-up Rejected after deal evaluation 7 GPS based mobile games developer 21 Start-up Rejected after deal screening 8 Car repair comparison app and platform 44 Start-up Rejected after deal evaluation 9 Platform for connecting employers and job seekers 8 Start-up Rejected after deal screening 10 Accounting network to monitor and connect flex workers 8 Start-up Rejected after deal screening 11 Crowd funding platform for live events 3 Start-up Rejected after deal evaluation 12 Advertisement in and on taxi's 16 Start-up Rejected after deal screening 13 Peer 2 peer boat rental platform 9 Start-up Rejected after deal screening

14 Online advertising app 15 Start-up Rejected after deal screening

15 Online retail store for sports accessories 6 Start-up Rejected after deal screening 16 Mobile quest app for children 2 Start-up Rejected after deal screening

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4.4 Reliability, objectivity and repeatability

In order to establish a valid research it is required that the outcome is objective and reliable. Objectivity is dependent on whether the drawn conclusions originate exclusively from the object that is studied. Subjective conclusions or interpretations reflect a bias in the research, which causes damage to the reliability. Conclusions reflect reliability when it represents objective interpretations. When conclusions represent interpretations dependent on which researcher has carried out the study, the findings can be considered unreliable. By using the triangulation method, I will use several data collection methods, and thereby increase the reliability and objectivity of this study.

According to Saunders et al, (2009) qualitative data shows a great deal of variety, which means that there does not exist a standard format for analyzing the gathered data. For this reason the triangulation method is sensitive to researcher bias, which poses a limitation in applying the triangulation method. Since the researcher has to decide on how to assess the data, this has to be selected carefully.

4.5 Data analysis

The data in this research will be analyzed from a deductive perspective. This demands that the qualitative interviews are derived from a solid body of literature (Saunders et al., 2009). The different stages as described in the literature review, serve as the basis of the interview questions. The interview questions are grouped into the four identified stages of the pre-investment process; deal origination; deal screening; deal evaluation; and deal structuring. To get a clear understanding of the whole process, the responses from all interviewees regarding the different stages are then grouped and ordered in a chronological manner to establish the process.

The interviews were transcribed verbatim and were sent to the interviewees afterwards for verification. The transcribed interviews can be found in appendix (3). After the interviewees approved the use of the transcribed interviews, the transcribed text was scanned for variables relating to the investment process. These variables were taken from prior research on the investment process by Tyebjee and Bruno (1984).

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26 proposals. These interviews are also transcribed in verbatim. This document was then scanned for criteria and compared to the criteria that can be found in CVC criteria research conducted by Siegel et al., (1988), and Weber and Weber (2005).

4.6 Confidentiality

The data used to conduct this research is confidential. Due to this, the collected information has to be treated with great care. To ensure confidentiality, I was asked to sign a confidentiality agreement. Therefore, this thesis may only be read by the thesis supervisor (Mrs. Zhou), the co-assessor (Mr. Lutz) and representatives from Company X.

4.7 Limitations

Initially, this research was intended to be a problem-solving thesis. After two informal meetings with a representative of Company X, who previously studied at the Rijksuniversiteit Groningen, the business problem was established and a research proposal was submitted and approved. In the summer of 2014, this representative resigned from his job, and I was assigned another representative of Company X. This new contact person did not recognize the business problem as established earlier. Therefore, the research was changed to a single-case study, contributing to the little body of knowledge on the CVC investment process and investment criteria.

The interviews, with all Company X employees were arranged through the new contact person at Company X. During the interview with interviewee 3, the interim investment manager, it became clear that he was holding his position for only one month. He stated that: “you should discuss these questions with [the investment director]”. Unfortunately, this interview did not lead to significant findings on the investment process, or the investment criteria of Company X.

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27 The documents that were available to me consisted solely of the PowerPoint presentations that the entrepreneurs sent to Company X to present their business plan. These did not include any indication on how Company X evaluated the business opportunity. I requested access to notes, e-mails or other internal documentation that could provide proof for the presence or absence of specific investment criteria. However, I was declined access to this documentation. Therefore, the two second-round interviews served as the only of which investment criteria were used in the evaluation.

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5. Results

This chapter reports the findings of this study. First, I will present the results regarding the investment process. Secondly, in chapter 5.2, I will report the findings regarding the investment criteria. The findings will be illustrated by quotes from the interviewees that participated in this research.

5.1 Investment process

The investment process of Company X comprises of a series of sequential and simultaneous steps. As a result from the first-round interviews, a process model of the investment process at Company X was established (Fig. 6). It depicts the different activities from the moment Company X gets in touch with an entrepreneur till signing the investment contract.

The investment process can be categorized in six stages: Deal origination, deal screening, deal evaluation, negotiation, due diligence, and contract. Each of the investment stages consists of several main activities. Below I will show the evidence that led to the creation of this process model and I will show why it comprises of six stages. As can be seen in the process model, there are several stages in which the investment proposal can be rejected. I will address these ‘no-go’ events as well.

5.1.1 Deal origination

In the deal origination stage, it is crucial that Company X gets access to viable investment opportunities. The deal origination stage comprises of two main activities; connecting with entrepreneurs, and receiving investment proposals.

The first activity in this stage is to connect with entrepreneurs looking for an investment. Company X gets in touch with entrepreneurs in three different ways. Firstly, the majority of entrepreneurs contact Company X directly via e-mail. Secondly, Company X executes PR-activities, such as attending start-up events and sending out press releases. This gets the word out about their existence. The investment director explained:

“On a yearly bases around four hundred ventures contact us. Two hundred of these contact us by e-mail… perhaps even two thirds. [And] one third reaches us by phone or through an event. Of that [one third] the majority through events.” (Interviewee 4)

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30 ventures, the early-stage investment opportunities are occasionally referred to other investors such as CVCs. From these referrals, the majority of referrals originate from the internal network. As indicated by an investment manager:

“As a strategic investor, we invest in companies that are close to the corporation. Whether it is a product manager [within the corporation] or a sales manager, they are constantly active in the field and do business with people. Sometimes they get in touch with entrepreneurs who are looking for finance. These entrepreneurs might ask this employee to introduce them to Company X. We receive many proposals in this way. That is, through people who do business with someone within the corporation.” (Interviewee 2)

After the first contact is established, the entrepreneur is asked to send a business proposal, or as Company X calls this, a ‘pitch deck’. This is the second and last activity of the deal origination stage. The proposal sent by the entrepreneurs usually consists of a PowerPoint presentation in which investment opportunity is presented. Typically, included in the proposal are the product characteristics, the business model of the venture, the background of the entrepreneurial team and the amount of investment asked for.

5.1.2. Deal screening

In this stage, the CVC engages in a structural assessment of the investment opportunity. There are four main activities in this stage: the proposal screening, collecting information about the venture and the market, getting to know the entrepreneurial team, and creating an ‘info doc’.

First, the CVC screens the investment proposal by applying the main investment criteria that are relevant for this CVC. The most important criterion is that there needs to be a strategic fit with the corporate strategy. Other important criteria in this first stage are absolute amount of investment requested, and the financing stage of the venture. Company X focuses on early-stage ventures that usually don’t require more than €500.000,-. Although this is not a hard criterion, the majority of early-stage ventures fit within this investment range. As the investment director put it:

“We have a clear set of criteria: The amount that we invest, the phase in which the venture has to be. Their product needs to be ‘live’. They should have some customers and it should fit within the domains that we focus on. That is, media, e-commerce and education. If it really does not fit within this scope, it will be rejected immediately, before we even discuss it with our investment managers.” (Interviewee, 4)

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31 any criteria or is way out of range for the CVC, it will be rejected. However, if the manager sees a slightest match with any of the criteria, the business plan will be discussed during a weekly Monday team meeting. The interim investment manager pointed out:

“[When we see a match] we will discuss the venture during a weekly team meeting [with the investment team]. Based on this we might agree that it is an interesting proposal and we will collect more information [about the investment opportunity].” (Interviewee 3)

When a proposal passes through these first ‘yes/no’ questions, Company X will collect information regarding the investment opportunity. This ranges, from contacting the entrepreneur by telephone, to doing some desk-research about the venture or market, or inviting the entrepreneur for an informal meeting to go through explain his business plan. This informal meeting will be held at the corporate HQ and serves as an opportunity for the CVC to get an impression of the entrepreneur, his or her capabilities and walk through the business plan that the entrepreneur has submitted. Critical questions will be asked about the product, the business model and other relevant topics. Usually the entrepreneurs also have many questions about the way the investment takes place and how the corporate mother can be of further assistance in the future. In addition, the valuation will be discussed. As one manager put it:

“The valuation is one of the topics we discuss. If the valuation is too far from what we do, then we can’t invest and we can stop the conversation.” (Interviewee, 2).

The manager then reports his findings and first impressions of the entrepreneur to the CVC team during the next Monday meeting. The team discusses these findings and can decide to invite the entrepreneur for a second or third informal meeting in case there are still some questions or doubt about the investment opportunity. When the business opportunity is clear, the CVC decides whether the business proposal is interesting enough to continue with the entrepreneur or not. After this decision roughly 65% of the proposals are rejected.

When a proposal passed the screening stage, the findings of this assessment will then be documented in an ‘info doc’. This document is a summary of the findings in the deal-screening stage and contains all relevant background information about the investment opportunity for the investment committee. The following quote illustrates this:

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as a report for ourselves, but more importantly, we can share our findings and conclusions with our stakeholders.” (Interviewee 4)

When a proposal does not pass through the screening stage, it will be rejected via e-mail or by telephone, and no info doc will be made.

5.1.3. Deal evaluation

When the CVC decides to continue, the entrepreneur is invited to pitch the business opportunity for an investment committee. This investment committee consists of the CVC team, and a small delegation of corporate executives. Depending on the strategic fit with the corporate mother, the directors of relevant departments from within the corporate mother will also be invited. The investment committee usually consists of approximately eight to nine people. The following quote illustrates:

“The investment committee has the authority to approve [or reject] investments. […] Company X does not make investment decisions, the investment committee does. Company X only provides recommendations to the investment committee”. (Interviewee 1)

In order to prepare the corporate executives and other directors for this investment pitch, the CVC sends the entire committee the ‘info doc’. The investment director points out:

“We organize a pitch session. To prepare [the investment committee] for this pitch, we send them the ‘info doc’. Because when we think [the business proposal] is a good idea, we want the investment committee to be able make a well-informed decision. […] (Interviewee 4)

After the investment pitch, the investment committee will decide whether to continue with the entrepreneur or not. An investment manager explains:

“When [the investment committee] is enthousiastic [about the deal], we receive a ‘go’ to start the negotiations. Then it is up to us whether we can construct a deal [with the entrepreneur]”. (Interviewee 2)

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“We always invest by means of a convertible loan. The conditions [in the termsheet] are standardized. We do not have very strict requirements because we believe that we have to work together [with the entrepreneur] in a very constructive manner. Therefore, we do not want to position ourselves as banks do, with having all kinds of controls. We are in it together… ‘Founder-friendly’ might be exaggerated, but the term sheet is very ‘fair’. (Interviewee 4)

5.1.4 Negotiation

Next, the official deal negotiation stage is set in motion. However, the position of the negotiation stage in the investment process model is a contentious one. Although, formally the negotiation starts after the CVC sends out a term sheet to the entrepreneur, there has already been some form of negotiations earlier in the investment process. As one of the interviewees states:

“We try to negotiate whenever it is most relevant. Actually, the negotiations start off during the deal screening or the first meeting when we are talking about the valuation […]. The amount of stock we get usually has been clear from the beginning. Because when we report to the investment committee we have to be able to say: we can pay this amount and in return we will get this amount of stock” (Interviewee 2).

Company X takes into account that many of the investees are small-sized businesses that only consist of a few employees. These startups usually do not have ‘legal’ employees. For this reason it is important that the contract is not too complicated. As illustrated by the following quote:

“We want to keep it simple. You really have to collaborate with each other. So it does not make any sense when [the contract] is too complicated. Especially in small businesses with only five to twenty employees. You can’t work with very elaborate contracts, that just does not work.” (Interviewee 1)

5.1.5. Due diligence

Once the official negotiations have finished, Company X starts the due diligence phase. This consists of four different types of due diligence: technical-, legal-, financial- and commercial due diligence. The majority of business opportunities that reach this stage offer a digital- or software based product or service. Therefore, the technical due diligence focuses on assessing the quality of the digital infrastructure of the venture. Interviewee 2 states:

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34 During the legal due diligence, the CVC checks whether the statutes of the venture allow the CVC for investing in the venture. A manager notes:

“We invest […] always in legal entities, in the Netherlands this means that this is always a limited company. It is important that the statutes of the limited company allow us to invest in the way we would like to. Have all the annual balance sheets been deposited? Did the board execute all their historic obligations? We also have a look at all the contracts and agreements that the venture has with the outside world”. (Interviewee 2)

Next, the CVC performs the financial due diligence. In this step, Company X examines whether the finances of the venture are healthy. The bookkeeping is looked into, debts are accounted for and other finance related issues are assessed. One of the interviewees clarifies:

‘From a financial perspective… are there any problematic financial issues? For instance, does the limited company have debt that they did not mention to us. Or has the bookkeeping been done properly. This [financial due diligence] is executed to make sure we don’t ‘buy a pig in a poke’” (Interviewee 1).

Another investment manager states:

“Actually, the financial [due diligence] is the easiest, this is a sort of audit examination. It’s about the administrative system [of the venture]. We want to know whether the numbers which have been provided to us - such as the profit and loss account, cash flow statement, and balance sheet - that have been provided to us are correct.” (Interviewee 2)

Lastly, the CVC performs a commercial due diligence. The commercial due diligence focuses on the market characteristics in which the venture operates. Questions will be answered such as, is there a market demand? Are the current customers satisfied with the product? How loyal are the customers? These are issues that Company X would like to know early in the process, and therefore could already start during the deal screening stage. As one of the respondents put it:

“The commercial due diligence could be executed at an earlier stage [in the process]. The other due diligence areas will only be executed if we already know that we will make the investment, contingent on whether the due diligence will not reveal anything strange. The commercial due diligence could be executed earlier to get a better understanding of the economical potential of the company” (Interviewee 2).

5.1.6. Contract

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35 the investment process, the negotiation phase has already occurred, the only activity left in the investment process, is signing the deal. Interviewee 2 points out:

“After the negotiation [stage] we will send the investment committee an update of our agreements [with the venture]. This update says: we agreed on ‘this and that’, we think we should do the deal. If you do not have any objections we will conduct the due diligence. If that does not result in any problems we will just sign the contract.” (Interviewee 2)

5.2 Investment criteria

Table 4 shows the combined results of the second round interviews and the document analysis. For each of the 16 proposals it is shown which investment criteria were applied by the investment managers of Company X. These investment criteria – that played in important role in the appraisal process – are accompanied by evidence in the form of quotes from the second round interviews, and insights from the document analysis. The table also shows in which stage each investment proposal was rejected. Since all analyzed investment proposals were rejected, table 5 categorizes the ‘critical’ rejection criteria from table 4 that eventually led to the rejection of the proposal. The criteria are categorized based on the classification by Silva (2004). With the exception of the category ‘regarding the venture’ it shows that each type of classification is as likely to be used in the deal screening as in the deal evaluation stage.

5.2.1 Rejected after deal screening

Eight proposals were rejected after the deal screening stage. This is the second stage of the investment process, after the deal origination. These rejected proposals are: 7, 9, 10, 12, 13, 14, 15, and 16. Four of these proposals did not have any positive criteria. The remaining four proposals all had a strategic fit with Company X, one of which also showed a market demand for the product. Since all of these proposals were rejected after the deal screening stage, the negative rejection criteria – which caused the proposals to be rejected – are in the majority.

TOWARDS A MODEL OF CORPORATE VENTURE CAPITAL INVESTMENT DECISION-MAKING