Research

Job Market Paper

While traditional venture capital (TVC) has been shown to be a key factor in the making of high-growth young firms, a quarter of U.S. venture capital investments are made by non-financial firms via corporate venture capital (CVC). Unlike TVC, which represents financial intermediation, CVC represents a match between non-financial firms that may be motivated by synergies. I investigate whether and how CVC enables young firms to rapidly grow, relative to TVC. I formalize the hypothesis that CVC can influence young firm outcomes through demand and/or technology spillovers using a simple model of staged financing and young firm innovation. To test the hypothesis, I assemble a micro-level dataset that links each recipient of U.S. venture capital to the funder(s) and the recipient's subsequent patenting and exit outcomes. To address the endogeneity of investment relationships as well as to separately identify the causal effects of CVC and TVC in the presence of CVC-TVC syndication, I employ a shift-share style research design that predicts both forms of investments at the industry level using the interaction of the initial market shares of different funders and several instruments for funder-specific supply shifts. My estimates reveal that the effect of CVC is at least as large as the effect of TVC. Moreover, the effect of CVC is found to be stronger when the funded firm is upstream with respect to the CVC funder in the Input-Output matrix and downstream in the patent citation matrix, lending support to the hypothesized demand and technology channels of CVC.

Work in Progress

Non-financial firms fund start-up and young businesses through corporate venture capital (CVC), a form of minority equity investment modeled on the traditional approach to venture capital but often times motivated by strategic payoffs. This paper investigates the effect of CVC on one form of strategic payoff to the funding firms: corporate innovation. I construct and analyze a micro-level dataset that links CVC investments to U.S. publicly traded firms and their patenting activity. I track the funding firms before and after starting CVC, in comparison to a group of control firms defined by firm size, age, industry, and prior growth. I find that CVC leads to an increase in patenting rate at the funding firms. Importantly, much of the effect is driven by smaller-sized funding firms, informing the potential relationship between CVC and internal innovation.

Work in Progress

Corporate venture capital (CVC) accounts for a large share of total U.S. venture capital investments. This paper evaluates the implications of CVC for aggregate economic outcomes. I develop a growth model featuring CVC and endogenous firm innovation that is consistent with a set of facts on U.S. CVC, including (i) the selection of large and highly innovative firms into making CVC investments and (ii) positive treatment effects associated with CVC on both the funded and the funding firms in terms of innovation outcomes. In equilibrium, firms engaged in CVC benefit from the positive treatment that makes them innovate more, whereas the rest of the firms reduce innovation as they face more intense competition. These forces in turn affect firm selection and the incentives for new entrepreneurship. Quantitative analysis suggests that a higher level of CVC activity leads to an overall increase in aggregate growth, a fall in entry, and a fattening of the firm size distribution at both tails.

Corporate Vulnerability in the Wake of COVID-19, Selected Issues Paper in IMF Country Report No. 21/155, 2021, with Efthymios Argyropoulos and Francisco Parodi

Monetary Policy and the Inflation-Output Tradeoff in Iran, Selected Issues Paper in IMF Country Report No. 14/94, 2014, with Robert Blotevogel