College of Business

Corporate venturing activities, driven largely by the need to be competitive in the Internet Age, have out-paced the accompanying theory on how such programs can create value. This article presents a framework for understanding value creation through a firm's venture capital programs. The framework includes two stages of value creation: a firm creates value through building technology equity and brand equity, and then corporate venturing programs can multiply this value. A mediating variable, free cash flow level, is included to allow for effective use of venture funds.