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The survival of venture capital backed companies : an analysis of the French case

  • Sophie Pommet

    ()

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université de Nice Sophia Antipolis (UNS))

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    We 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 a ffect 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 rm 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 ob- tained in previous studies on Germany and Belgium which show that receiving venture capital does not improve firm survival.

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    File URL: http://halshs.archives-ouvertes.fr/docs/00/72/09/27/PDF/spommet_VC_survival_analysis.pdf
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    Paper provided by HAL in its series Working Papers with number halshs-00720927.

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    Date of creation: 2011
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    Handle: RePEc:hal:wpaper:halshs-00720927
    Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00720927
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