The role of domestic and cross-border venture capital investors in the growth of portfolio companies

This paper studies how the presence of cross-border as opposed to domestic venture capital investors is associated with the growth of portfolio companies. For this purpose, we use a longitudinal research design and track sales, total assets and payroll expenses in 761 European technology companies f...

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Bibliographic Details
Published in:Small business economics 2013-04, Vol.40 (3), p.553-573
Main Authors: Devigne, David, Vanacker, Tom, Manigart, Sophie, Paeleman, Ine
Format: Article
Language:English
Subjects:
Business and Management
Business structures
Capital investments
Competitive advantage
Cross border transactions
Entrepreneurship
Europe
Financial portfolios
Financial services
Globalization
Growth models
Hypotheses
Industrial Organization
Investment
Investment companies
Investors
Management
Microeconomics
Payroll
Reassessing the Relationships between Private Equity Investors and Their Portfolio Companies
Sales growth
Start up firms
Startups
Statistical data
Syndicates
Technology
Theory
Venture capital
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Summary:This paper studies how the presence of cross-border as opposed to domestic venture capital investors is associated with the growth of portfolio companies. For this purpose, we use a longitudinal research design and track sales, total assets and payroll expenses in 761 European technology companies from the year of initial venture capital investment up to seven years thereafter. Findings demonstrate how companies initially backed by domestic venture capital investors exhibit higher growth in the short term compared to companies backed by cross-border investors. In the medium term, companies initially backed by cross-border venture capital investors exhibit higher growth compared to companies backed by domestic investors. Finally, companies that are initially funded by a syndicate comprising both domestic and cross-border venture capital investors exhibit the highest growth. Overall, this study provides a more fine-grained understanding of the role that domestic and cross-border venture capital investors can play as their portfolio companies grow and thereby require different resources or capabilities over time.
ISSN:0921-898X
1573-0913
DOI:10.1007/s11187-011-9383-y