TITLE:
Revenue and Knowledge Cooperation Mechanisms between Business Incubators and Venture Capitalists for Collaborative Start-Ups
AUTHORS:
Wenqing Wu, Qing Han
KEYWORDS:
Business Incubator, Venture Capitalist, Revenue Sharing Mechanism, Cost Sharing Mechanism, Knowledge Sharing Mechanism
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.5,
August
2,
2017
ABSTRACT: Business incubators and venture capital are
effective instruments for supporting the development of new firms. The purpose
of this paper is to explore cooperation mechanisms between business incubators
and venture capitalists and find the equilibriums of the mechanisms. Also, this
paper puts forward three mechanisms, revenue sharing mechanism, cost sharing
mechanism and knowledge sharing mechanism, to discuss the cooperation between
business incubators and venture capitalists. Meanwhile, we consider the effect
of the business incubator’s altruism and compare the three cooperation
mechanisms with and without altruism. The results indicate that the mechanism
of revenue sharing leads to the highest incubator’s revenue sharing proportion.
Additionally, the incubator’s revenue sharing proportion decreases even though
its final profit increases when considering altruism. Therefore, the nonprofit
incubator can be better for cooperating with the venture capitalist than the
profit incubator. Finally, financial returns can influence their cooperation.