The Impact of Venture Capital on the Productivity Growth of European Entrepreneurial Firms: 'Screening' or 'Value added' Effect?
75 Pages Posted: 9 Nov 2010 Last revised: 19 Jan 2018
Date Written: May 16, 2013
We aim to ascertain to what extent the better performance of European venture capital (VC)-backed firms in high-tech industries is due to either ‘screening’ or ‘value added’ provided by VC investors. We compare portfolio firms’ productivity growth before and after the first VC round, using a matched control group as benchmark. We show that productivity growth is not significantly different between VC and non-VC-backed firms before the first round of VC financing, whereas significant differences are found in the first years after the investment event. We also find that the value-adding services provided by VC investors 'imprint' the portfolio firm.
Keywords: venture capital, entrepreneurial firms, productivity, screening, value added, imprinting effect
JEL Classification: G24, D24, M13, C23
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