Venture capital and innovation at the firm level
AbstractThis paper studies the relationship between venture capital (VC) and innovation using a self-collected dataset containing 119 innovative, VC-funded firms and 164,486 controls that operate in Spain. Probit model estimates indicate that firms that have applied for at least one patent are significantly more likely to obtain VC investments. However, when implementing a matching approach to correct for selectivity, no evidence is found of a significant impact of VC on firms’ patenting activity. Rather, evidence is found of a positive effect of VC on the sales growth of funded firms. These results suggest that, rather than having an impact on innovation activities, venture capitalists (VCs) focus on the commercialization of existing products. A finer breakdown by ownership and investment stage also provides evidence that private VCs and early stage investments are notably more effective at stimulating sales than public VCs and late stage investments respectively.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2010/12.
Length: 40 pages
Date of creation: 2010
Date of revision:
Venture capital; innovation; patents; matching estimator;
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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-02 (All new papers)
- NEP-ENT-2010-05-02 (Entrepreneurship)
- NEP-INO-2010-05-02 (Innovation)
- NEP-IPR-2010-05-02 (Intellectual Property Rights)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laura Bottazzi & Marco Da Rin, 2002. "Venture capital in Europe and the financing of innovative companies," Economic Policy, CEPR & CES & MSH, vol. 17(34), pages 229-270, 04.
- Keilbach, Max & Engel, Dirk, 2002.
"Firm Level Implications of Early Stage Venture Capital Investment: An Empirical Investigation,"
ZEW Discussion Papers
02-82, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Engel, Dirk & Keilbach, Max, 2007. "Firm-level implications of early stage venture capital investment -- An empirical investigation," Journal of Empirical Finance, Elsevier, vol. 14(2), pages 150-167, March.
- Max Keilbach & Dirk Engel, . "Firm Level Implications of Early Stage Venture Capital Investment - An Empiri cal Investigation," Papers on Entrepreneurship, Growth and Public Policy 2005-22, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- Dirk Engel, 2004. "The Performance of Venture-Backed Firms: The Effect of Venture Capital Company Characteristics," Industry and Innovation, Taylor & Francis Journals, vol. 11(3), pages 249-263.
- Haeussler, Caroline & Harhoff, Dietmar & Müller, Elisabeth, 2009.
"To Be Financed or Not... - The Role of Patents for Venture Capital Financing,"
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
253, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Mueller, Elisabeth & Harhoff, Dietmar & Haeussler, Carolin, 2009. "To Be Financed or Not : The Role of Patents for Venture Capital Financing," ZEW Discussion Papers 09-003, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, 01.
- Hall, Bronwyn H. & Lerner, Josh, 2010.
"The Financing of R&D and Innovation,"
MERIT Working Papers
012, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.