Practice 4: Internal technical due diligence. Unlike VCs who outsource technical to external consultants (Fried and Hisrich, 1994), CVCs often rely on corporate business units as expert advisors on the potential and fit with the technology’s parent’s technology. The following quote illustrates: due diligence, the parent will be used whenever we can. In general, the quality of due “For diligence that you can do is better than a consultant because usually the question you're really wanting to know is: can I create from this? Can I create a revenue and profit generating product?” (Mi1, Mi) The emphasis on internal technical due diligence varied across the cases. Some cases relied on a mix of internal and external experts. We coded those cases as having moderate emphasis on the practice. Other cases relied primarily on corporate business units for technical advice and due diligence, demonstrating on the practice. Comparative quotes for strong emphasis all cases are presented in table 4. Table 4 about here Two reasons accounted for CVC reliance on internal due diligence. First, internal due diligence signals engagement of the CVC program with the rest of the corporation. The following quote illustrates: we prefer internal due diligence for the simple reason that we are trying to win over the “Yes, hearts and minds and get support... We could be are you using so questioned ‘why outside?’, by preference we use in-house. It helps us in terms of building and making sure that what we are doing is what the LP (K2, Kappa) wants...” Second, CVCs have access to unique resources (Narayanan et al., 2009); the technical expertise of the business units can reduce information asymmetry and adverse selection (Wright and Robbie, 1998). Corporate experts can provide quick and reliable information regarding the viability and potential of the technology. The following quotes illustrate: for contacting the business units is access immediately to technical experts who “The reason understand the commercial potential. I used to say that with the access got to due we’ve
Practice 4: Internal technical due diligence. Unlike VCs who outsource technical to external consultants (Fried and Hisrich, 1994), CVCs often rely on corporate business units as expert advisors on the technology’s potential and fit with the parent’s technology. The following quote illustrates: “For due diligence, the parent will be used whenever we can. In general, the quality of due diligence that you can do is better than a consultant because usually the question you're really wanting to know is: can I create from this? Can I create a revenue and profit generating product?” (Mi1, Mi) The emphasis on internal technical due diligence varied across the cases. Some cases relied on a mix of internal and external experts. We coded those cases as having moderate emphasis on the practice. Other cases relied primarily on corporate business units for technical advice and due diligence, demonstrating strong emphasis on the practice. Comparative quotes for all cases are presented in table 4. Table 4 about here Two reasons accounted for CVC reliance on internal due diligence. First, internal due diligence signals engagement of the CVC program with the rest of the corporation. The following quote illustrates: “Yes, we prefer internal due diligence for the simple reason that we are trying to win over the hearts and minds and get support... We could be questioned ‘why are you using outside?’, so by preference we use in-house. It helps us in terms of building and making sure that what we are doing is what the LP wants...” (K2, Kappa) Second, CVCs have access to unique resources (Narayanan et al., 2009); the technical expertise of the business units can reduce information asymmetry and adverse selection (Wright and Robbie, 1998). Corporate experts can provide quick and reliable information regarding the viability and potential of the technology. The following quotes illustrate: “The reason for contacting the business units is access immediately to technical experts who understand the commercial potential. I used to say that with the access we’ve got to due