The Impact of Venture Capital Monitoring in Europe

29 Pages Posted: 27 Jan 2017

See all articles by Massimo G. Colombo

Massimo G. Colombo

Politecnico di Milano

Diego D'Adda

Polytechnic University of Marche

Paolo Malighetti

University of Bergamo

Anita Quas

University of Milan

Silvio Vismara

University of Bergamo

Date Written: January 5, 2017

Abstract

In this paper we aim to empirically test the monitoring effect of Venture Capital financing on portfolio companies. Following Bernstein et al. (2015), we exploit the introduction of a new airline route between investor and investee locations as an exogenous shock lowering the cost of monitoring activities performed by a venture capitalist. Using a sample of 9,564 investments by lead VC investors in Europe, we test how this treatment affects portfolio companies’ performances in terms of the likelihood of being listed or acquired, the number of patents, the number of employees and the amount of sales. Our results show that VC monitoring has a positive and economically relevant effect on European portfolio companies along most of these performance measures, but with different time horizons.

Keywords: Venture Capital, Monitoring, Europe, Corporate Venture Capital, Cross-Border Investments

JEL Classification: G24, L26

Suggested Citation

Colombo, Massimo G. and D'Adda, Diego and Malighetti, Paolo and Quas, Anita and Vismara, Silvio, The Impact of Venture Capital Monitoring in Europe (January 5, 2017). Available at SSRN: https://ssrn.com/abstract=2906236 or http://dx.doi.org/10.2139/ssrn.2906236

Massimo G. Colombo

Politecnico di Milano ( email )

Piazza Leonardo da Vinci, 32
20113 Milan
Italy

Diego D'Adda

Polytechnic University of Marche ( email )

P.zza Roma 22
Ancona, 60121
Italy

Paolo Malighetti

University of Bergamo ( email )

Via Salvecchio, 19
Bergamo, 24129
Italy

Anita Quas (Contact Author)

University of Milan ( email )

Via Festa del Perdono, 7
Milan, 20122
Italy

Silvio Vismara

University of Bergamo ( email )

Via dei Caniana
2
Bergamo, 24127
Italy
24127 (Fax)

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