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Formal venture capital acquisition: can entrepreneurs compensate for the spatial proximity benefits of south east of England and ‘star’ golden triangle universities?

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  • C. MUELLER
  • P. WESTHEAD
  • M. WRIGHT
Abstract
Building on the resource-based view of the firm and signalling theory, we challenge the traditional perspective that spatial proximity benefits can be leveraged by university spin-outs (USOs) located in the South East of England (i.e. particularly those drawn from ‘star’ golden triangle universities with additional reputational benefits), and USOs located elsewhere will be constrained from obtaining first formal venture capital (VC) required for venture development. Utilising a longitudinal database of 134 USOs involving unique archival and survey data, event history analysis identified counter to the traditional perspective that USOs located outside the South East of England were significantly more likely to obtain formal VC. Also, counter to the spatial proximity benefits view ‘star’ golden triangle USOs were not significantly more likely to obtain VC. Our evidence supports a spatial mismatch view between investors and investees. Resource combination signals sent by USOs and favourably received by VC firms were found to differ according to USO location context. USOs located outside the South East of England and ‘star’ golden triangle universities that signal the credible presence of habitual founders were more likely to obtain VC. USOs located outside ‘star’ golden triangle universities that had previously obtained publicly-backed equity finance were also more likely to obtain VC. However, USOs located in the South East of England with reputable management teams were more likely to obtain VC.

Suggested Citation

  • C. Mueller & P. Westhead & M. Wright, 2012. "Formal venture capital acquisition: can entrepreneurs compensate for the spatial proximity benefits of south east of England and ‘star’ golden triangle universities?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/802, Ghent University, Faculty of Economics and Business Administration.
    • Handle: RePEc:rug:rugwps:12/802
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    Cited by:

    1. Einar Rasmussen & Paul Benneworth & Magnus Gulbrandsen, 2013. "Scoping paper: Developing University Innovation Capacity: How can innovation policy effectively harness universities’ capability to promote high-growth technology businesses?," Working Papers on Innovation Studies 20131007, Centre for Technology, Innovation and Culture, University of Oslo.
    2. Gry Agnete Alsos & Elisabet Ljunggren, 2017. "The Role of Gender in Entrepreneur–Investor Relationships: A Signaling Theory Approach," Entrepreneurship Theory and Practice, , vol. 41(4), pages 567-590, July.
    3. Marius Tuft Mathisen & Einar Rasmussen, 2019. "The development, growth, and performance of university spin-offs: a critical review," The Journal of Technology Transfer, Springer, vol. 44(6), pages 1891-1938, December.
    4. Clarysse, Bart & Wright, Mike & Bruneel, Johan & Mahajan, Aarti, 2014. "Creating value in ecosystems: Crossing the chasm between knowledge and business ecosystems," Research Policy, Elsevier, vol. 43(7), pages 1164-1176.
    5. Mike Wright, 2014. "Academic entrepreneurship, technology transfer and society: where next?," The Journal of Technology Transfer, Springer, vol. 39(3), pages 322-334, June.
    6. Einar Rasmussen & Mike Wright, 2015. "How can universities facilitate academic spin-offs? An entrepreneurial competency perspective," The Journal of Technology Transfer, Springer, vol. 40(5), pages 782-799, October.
    7. Larsson, Johan P. & Wennberg, Karl & Wiklund, Johan & Wright, Mike, 2017. "Location choices of graduate entrepreneurs," Research Policy, Elsevier, vol. 46(8), pages 1490-1504.
    8. Alperovych, Yan & Groh, Alexander & Quas, Anita, 2020. "Bridging the equity gap for young innovative companies: The design of effective government venture capital fund programs," Research Policy, Elsevier, vol. 49(10).
    9. Wilson, Nick & Wright, Mike & Kacer, Marek, 2018. "The equity gap and knowledge-based firms," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 626-649.
    10. Carmen Virues & Maria Velez & Jose M. Sanchez, 2019. "Signaling Trustworthiness to Stakeholders: International vs. Domestic Entrepreneurs," Sustainability, MDPI, vol. 11(7), pages 1-22, April.
    11. Roma, Paolo & Vasi, Maria & Kolympiris, Christos, 2021. "On the signaling effect of reward-based crowdfunding: (When) do later stage venture capitalists rely more on the crowd than their peers?," Research Policy, Elsevier, vol. 50(6).
    12. Christos Kolympiris & Sebastian Hoenen & Nicholas Kalaitzandonakes, 2018. "Geographic distance between venture capitalists and target firms and the value of quality signals," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(1), pages 189-220.
    13. Yannis Pierrakis & George Saridakis, 2019. "The role of venture capitalists in the regional innovation ecosystem: a comparison of networking patterns between private and publicly backed venture capital funds," The Journal of Technology Transfer, Springer, vol. 44(3), pages 850-873, June.
    14. Teirlinck, Peter & Bruylant, Anneleen, 2024. "Extended cyclic innovation model as a tool for failure identification in innovation management. Case study of 25 years of CMOS image sensor technology in Belgium," Technovation, Elsevier, vol. 129(C).

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