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  • 2020
  • Working Paper
  • HBS Working Paper Series

Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers

By: Ufuk Akcigit, Sina T. Ates, Josh Lerner, Richard Townsend and Yulia Zhestkova
  • Format:Print
  • | Language:English
  • | Pages:57
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Abstract

The treatment of foreign investors has been a contentious topic in U.S. entrepreneurship policy in recent years. This paper examines foreign corporate investments in Silicon Valley from a theoretical and empirical perspective. We model a setting where such funding may allow U.S. entrepreneurs to pursue technologies that they could not otherwise, but may also lead to spillovers to the overseas firm providing the financing and the nation where it is based. We show that despite the benefits from such inbound investments for U.S. firms, it may be optimal for the U.S. government to raise their costs to deter investments. Using as comprehensive as possible a sample of investments by non-U.S. corporate investors in U.S. start-ups between 1976 and 2015, we find evidence consistent with the presence of knowledge spillovers to foreign investors.

Keywords

Innovation; Corporate Venture Capital; Knowledge Spillovers; Innovation and Invention; Foreign Direct Investment; Venture Capital; Entrepreneurship; Policy; United States

Citation

Akcigit, Ufuk, Sina T. Ates, Josh Lerner, Richard Townsend, and Yulia Zhestkova. "Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers." Harvard Business School Working Paper, No. 21-043, September 2020.
  • SSRN
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About The Author

Josh Lerner

Entrepreneurial Management
→More Publications

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More from the Authors
  • Financial Acquisitions By: Josh Lerner, Amit Seru and Jennifer Zou
  • The Globalization of Silicon Valley: The Dynamics of Start-Up Diffusion By: Josh Lerner, Jacob Moscona and David Yang
  • Yinglan Tan: Scaling a Venture Capital Firm in Southeast Asia By: Josh Lerner
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