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Technical University of Munich

The Impact of Value Creation in Venture Capital in Shaping Startup Ecosystems

Advisor: Dr. Sarah Theinert (UVC Partners)

Start: ASAP

Background:
While the direct value creation of venture capital (VC) funds in individual portfolio companies has garnered significant attention, their influence extends beyond the company level to the broader startup ecosystem. VC funds contribute indirectly through network effects, market development, and ecosystem-building activities, such as fostering entrepreneurship, attracting talent, and shaping industry trends. However, these broader contributions are harder to measure and often underexplored in academic research.

Research Objective:
This thesis aims to explore the indirect value creation of VC funds by investigating how they shape and influence startup ecosystems. It will assess the mechanisms through which VC funds create value at a macro level, complementing research focused on direct value creation within individual startups.

Key Questions:

  • How do VC funds contribute to the development of startup ecosystems (e.g., through mentorship programs, knowledge sharing, and partnerships)?
  • What role do network effects and cross-fund collaboration play in ecosystem-level value creation?
  • How can ecosystem-level contributions of VC funds be measured, and how do these contributions differ across regions and sectors?
  • What is the relationship between ecosystem development and the success of individual VC funds?

Methodology:

  • Literature Review: Examine existing research on ecosystem-level contributions of venture capital and entrepreneurship. Identify gaps in the measurement of these contributions.
  • Case Studies: Study startup ecosystems in regions with prominent VC activity (e.g., Silicon Valley, Berlin, Tel Aviv) to analyze patterns of ecosystem-level value creation.
  • Quantitative Analysis: Use metrics such as the density of startups, rate of successful exits, and job creation to assess VC influence on ecosystems. Employ econometric models to explore causality between VC activities and ecosystem growth.

Literature:

  • Spigel, B. (2017). The relational organization of entrepreneurial ecosystems. Entrepreneurship Theory and Practice, 41(1), 49–72.
  • Feldman, M., & Zoller, T. D. (2012). Dealmakers in place: Social capital connections in regional entrepreneurial economies. Regional Studies, 46(1), 23–37.
  • Hochberg, Y. V., Ljungqvist, A., & Lu, Y. (2007). Whom you know matters: Venture capital networks and investment performance. The Journal of Finance, 62(1), 251–301.
  • Stam, E. (2015). Entrepreneurial ecosystems and regional policy: A sympathetic critique. European Planning Studies, 23(9), 1759–1769.
  • Kenney, M., & Patton, D. (2005). Entrepreneurial geographies: Support networks in three high-technology industries. Economic Geography, 81(2), 201–228.
  • Avnimelech, G., & Teubal, M. (2006). Creating venture capital industries that co-evolve with high tech: Insights from an extended industry life cycle perspective of the Israeli experience. Research Policy, 35(10), 1477–1498.
  • Autio, E., & Levie, J. (2017). Management of entrepreneurial ecosystems. In The Oxford Handbook of Entrepreneurship and Collaboration (pp. 1–38). Oxford University Press.
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