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Cross-border venture capital and the development of portfolio companies
Devigne, David Vanacker, Tom Manigart, Sophie Paeleman, Ine
Devigne, David
Vanacker, Tom
Manigart, Sophie
Paeleman, Ine
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Publication Type
Working paper
Editor
Supervisor
Publication Year
2011
Journal
Book
Publication Volume
Publication Issue
3
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Publication End page
Publication NUmber of pages
42
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Abstract
This paper studies how cross-border venture capital investors as opposed to domestic venture capital investors influence the development of their portfolio companies. For this purpose, we use a longitudinal research design and track sales from the year of initial venture capital investment up to seven years after this investment in 692 European technology-based companies. Findings demonstrate how companies backed by cross-border venture capital investors initially exhibit lower sales growth compared to companies backed by domestic investors. After a couple of years, however, companies backed by cross-border investors exhibit higher sales growth compared to companies backed by domestic investors. Finally, companies that raise finance from a syndicate comprising both domestic and cross-border investors develop into the biggest sales generators. Overall, this study provides a more textured understanding of the role played by venture capital investors as their portfolio companies develop and thereby require different resources or capabilities over time.
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Keywords
Accounting & Finance, Venture Capital, Cross-Border, International, Portfolio Company Development