The Survival of Venture Capital Backed Companies: An Analysis of the French Case
AbstractWe analyze the impact of venture capital on firm performance; more precisely, we investigate whether venture capital adds value to innovative French companies in terms of increasing their survival time. To this end, we use a hand-collected data set based on a sample of 139 French companies that went public at the \Nouveau Marché" between 1996 and 2002 to compare the survival rates of venture capital backed and non-venture capital backed companies. We develop two sets of econometric models to evaluate the factors that affect the fate of French initial public offerings. First, we estimate a discrete time duration model to explain the probability of exit. Second, we apply a competing risk model to account for heterogeneity in firm exit (liquidation versus merger/acquisition). Contrary to common wisdom, the estimates show that venture capital backed companies have a lower survival rate than non-venture capital backed companies and have a higher probability of being liquidated than other firms. Our results are comparable to those obtained in previous studies on Germany and Belgium which show that receiving venture capital does not improve firm survival.
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Bibliographic InfoPaper provided by Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis in its series GREDEG Working Papers with number 2012-14.
Length: 24 pages
Date of creation: Nov 2012
Date of revision:
venture capital; survival; innovation; France;
Find related papers by JEL classification:
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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