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The impact of venture capital on family businesses: Evidence from Spain

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  • Martí, José
  • Menéndez-Requejo, Susana
  • Rottke, Olaf M.

Abstract

We analyzed growth in family and non-family Spanish venture capital-backed firms. When the venture capital (VC) firm does not hold a majority stake, the usual risk aversion attitudes in family firms may lead to conflicts between the management cultures of the existing and new shareholders, which may affect growth. We found lower firm growth after the initial round in family firms only when the investor holds a minority stake. Our results may explain the under-representation of family firms in VC portfolios and highlight the need to align the objectives of family managers and VC investors before the initial VC round.

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  • Martí, José & Menéndez-Requejo, Susana & Rottke, Olaf M., 2013. "The impact of venture capital on family businesses: Evidence from Spain," Journal of World Business, Elsevier, vol. 48(3), pages 420-430.
    • Handle: RePEc:eee:worbus:v:48:y:2013:i:3:p:420-430
    DOI: 10.1016/j.jwb.2012.07.025
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    2. Nnabuife Ezimma K. & Okoli Ifeanyi Emmanuel & Arachie Augustine Ebuka & Adani Nnenne Ifechi, 2019. "The Intricacies of Female Successors in Family Owned Businesses," Journal of Entrepreneurship and Business Innovation, Macrothink Institute, Journal of Entrepreneurship and Business Innovation, vol. 6(1), pages 1-13, December.
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    5. Paglia, John K. & Harjoto, Maretno A., 2014. "The effects of private equity and venture capital on sales and employment growth in small and medium-sized businesses," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 177-197.
    6. Zhang, Jing & Pezeshkan, Amir, 2016. "Host country network, industry experience, and international alliance formation: Evidence from the venture capital industry," Journal of World Business, Elsevier, vol. 51(2), pages 264-277.
    7. Zaccaria, Luana, 2023. "Are family and friends the wrong investors? Evidence from U.S. start-ups," Journal of Corporate Finance, Elsevier, vol. 79(C).
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    9. Ginesti, Gianluca & Ossorio, Mario & Dawson, Alexandra, 2023. "Family businesses and debt maturity structure: Focusing on family involvement in governance to explain heterogeneity," Journal of Family Business Strategy, Elsevier, vol. 14(2).
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    11. Schickinger, Antonia & Leitterstorf, Max P. & Kammerlander, Nadine, 2018. "Private equity and family firms: A systematic review and categorization of the field," Journal of Family Business Strategy, Elsevier, vol. 9(4), pages 268-292.
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    14. Francisco C. Marques & Fernando A. F. Ferreira & Constantin Zopounidis & Audrius Banaitis, 2022. "A system dynamics-based approach to determinants of family business growth," Annals of Operations Research, Springer, vol. 311(2), pages 799-819, April.

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