Importance of the Non-financial Value Added of Government and Independent Venture Capitalists
AbstractThis paper compares the post-investment value-added activities performed by governmental venture capital (GVC) and independent venture capital (IVC) for their portfolio companies, and controls for the selection effect that the different investment profiles of these investors might have on the forms of value added. The study uses a unique data set based on a survey addressed to new VC-backed, technology-based firms from seven European countries. The study focused on the importance of the contribution by the first lead investor in a variety of activity areas, as assessed by the investee companies. The study also pays attention to potential adverse effects of the post-investment engagement of the investors on the firm. Using a composite indicator of the extent of the value added, we find no statistically significant difference between the two types of investors. However, the type of value added differs across investor type and, in particular, IVCs contribution proves to be significantly higher than that of GVCs in a number of areas, including the development of the business idea, professionalisation and exit orientation.
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Bibliographic InfoPaper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 1257.
Length: 32 pages
Date of creation: 2011
Date of revision:
Find related papers by JEL classification:
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-09-16 (All new papers)
- NEP-ENT-2011-09-16 (Entrepreneurship)
- NEP-EUR-2011-09-16 (Microeconomic European Issues)
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