New ventures face a tradeoff in considering corporate venture capital (CVC) funding. Corporate investors can provide valuable complementary resources that enhance the technology commercialization of new ventures. However, tight links with a particular corporate investor can constrain new ventures and their flexibility in accessing diverse resources from a variety of sources. Taking this tradeoff into account, I explore how corporate investors influence strategic outcomes and performance of new ventures. Using a sample of computer, semiconductor, and wireless ventures, I find that (1) CVC-funded ventures are generally more innovative compared to new ventures funded solely by independent venture capitalists (IVCs), (2) CVC-funded ventures whose corporate investors are relatively more reputable compared to their co-investing IVCs are more innovative and less likely to be acquired by another established firm that had not previously invested in those particular ventures compared to CVC-funded ventures whose corporate investors are relatively less reputable, and (3) CVC-funded ventures outperform new ventures funded solely by IVCs if they require specialized complementary assets and operate in uncertain environments. |