The inside track: Entrepreneurs' corporate experience and startups' access to incumbent partners' resources

Research SummaryStartups are increasingly turning to incumbent firms for venture capital, anticipating access to the investor's knowledge and complementary assets. However, startups' eventual access to these resources varies widely. This article highlights one important driver of such variance, whether startups' managers were previously employed by an incumbent in the same industry. Using data from the life sciences, I find that such corporate experience can precipitate technical knowledge flows to startups by enabling the generation of relational capital with incumbent firm managers. It also helps startups navigate incumbents' decision-processes to formalize access to downstream complementary assets via alliances. The former effect is stronger when corporate experience is technology-focused, the latter when it is commercialization-focused. Corporate experience at the investing incumbent firm amplifies informal knowledge-flows but not formal alliances.Managerial SummaryStartups typically expect corporate venture capital investors to facilitate access to resources these investors' parent companies control. However, such resource-access often does not materialize, with startups struggling to navigate the large, complex organizations within which these resources are located. I identify an important driver of variance in such resource-access. Prior experience working in an established company in the same industry enhances startup leaders' ability to informally tap into corporate investors' technical knowledge, and to formalize alliances to access corporate investors' go-to-market assets. Technology-focused experience is especially helpful with the former, and commercialization-focused experience with the latter. Such access is more likely to enable exit for the startup if the established firm has direct experience in the specific product markets the startup is focusing on.