Venture capital investor type and the growth mode of new technology-based firms

Fabio Bertoni, Massimo Colombo and Luca Grilli

Small Business Economics, 2013, vol. 40, issue 3, 527-552

Abstract: Independent venture capital (IVC) investors have more powerful incentives than corporate venture capital (CVC) investors to take actions that signal their capabilities (i.e. to “grandstand”). We argue that this should engender differences in the treatment effect of IVC and CVC on the mode of growth of portfolio companies. Short-term sales growth of IVC-backed firms in the period that immediately follows the VC investment should outpace that of CVC-backed firms, while we expect no difference in employment growth. We find support for these theoretical predictions on a sample of 531 Italian new technology-based firms, using several panel estimators to control for endogeneity of IVC and CVC. Copyright Springer Science+Business Media, LLC. 2013

Keywords: Venture capital; Corporate venture capital; High-tech start-ups; Firm growth; Grandstanding; D92; G24; L21; L26 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (38)

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DOI: 10.1007/s11187-011-9385-9

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