Venture capital as a catalyst for commercialization and high growth
Ryan Kelly () and
Hankook Kim ()
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Ryan Kelly: Innovation, Science and Economic Development Canada
Hankook Kim: Innovation, Science and Economic Development Canada
The Journal of Technology Transfer, 2018, vol. 43, issue 6, 1466-1492
Abstract We use Canadian data linking information on venture capital (VC) financing with firm-level administrative data to compare performance of VC-backed and non-VC-backed firms. The richness of the data allows us to incorporate a wide range of firm-level information into creating a control group based on propensity-score matching. In particular, we use typical covariates reflecting firm performance and characteristics (e.g., size, age, industry, location) as well as measures of firm-level innovation such as research and development (R&D) expenditures that are often thought to be associated with the potential for high growth and the probability of receiving VC financing. Our results show R&D expenditures not only attract VC, but are also increased more intensely for VC-backed firms than non-VC-backed counterparts over the short-run. Further, we show VC-backed firms enjoy greater growth in wages and scale over the 5-year period. Overall, our results provide empirical evidence that VC financing is associated with the acceleration of the innovation and commercialization process accompanied by greater growth in wages and scale.
Keywords: Venture capital; Innovation; Firm performance; Matching estimation (search for similar items in EconPapers)
JEL-codes: L25 L26 O32 (search for similar items in EconPapers)
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