The Role of Domestic and Cross-Border Venture Capital Investors in the Growth of Portifolio Companies

2 Pages Posted: 7 Jan 2011 Last revised: 22 Feb 2016

See all articles by David Devigne

David Devigne

Ghent University; Vlerick Leuven Ghent Management School

Tom R. Vanacker

Ghent University; University of Exeter Business School

Sophie Manigart

Vlerick Business School; Ghent University

Ine Paeleman

Ghent University

Date Written: December 31, 2010

Abstract

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.

Keywords: venture capital, domestic, cross-border, international, portfolio company growth, technology

JEL Classification: D92; G24; G32; G34, L25

Suggested Citation

Devigne, David and Vanacker, Tom R. and Manigart, Sophie and Paeleman, Ine, The Role of Domestic and Cross-Border Venture Capital Investors in the Growth of Portifolio Companies (December 31, 2010). Small Business Economics, 40 (3), 553-573 (2013). Available at SSRN: https://ssrn.com/abstract=1734668

David Devigne (Contact Author)

Ghent University ( email )

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Vlerick Leuven Ghent Management School ( email )

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Tom R. Vanacker

Ghent University ( email )

Sint-Pietersplein 7
Gent, 9000
Belgium

University of Exeter Business School ( email )

Streatham Court
Exeter, EX4 4JH
United Kingdom

Sophie Manigart

Vlerick Business School ( email )

Reep 1
Ghent, BE-9000
Belgium

Ghent University ( email )

Sint-Pietersplein 7
Gent, 9000
Belgium

Ine Paeleman

Ghent University ( email )

Coupure Links 653
Gent, 9000
Belgium

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