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Cross-Border Venture Capital And The Development Of Portfolio Companies

Author

Listed:
  • D. DEVIGNE

    ()

  • T. VANACKER
  • S. MANIGART
  • I. PAELEMAN

Abstract

This paper studies how cross-border venture capital investors as opposed to domestic venture capital investors influence the development of their portfolio companies. For this purpose, we use a longitudinal research design and track sales from the year of initial venture capital investment up to seven years after this investment in 692 European technology-based companies. Findings demonstrate how companies backed by cross-border venture capital investors initially exhibit lower sales growth compared to companies backed by domestic investors. After a couple of years, however, companies backed by cross-border investors exhibit higher sales growth compared to companies backed by domestic investors. Finally, companies that raise finance from a syndicate comprising both domestic and cross-border investors develop into the biggest sales generators. Overall, this study provides a more textured understanding of the role played by venture capital investors as their portfolio companies develop and thereby require different resources or capabilities over time.

Suggested Citation

  • D. Devigne & T. Vanacker & S. Manigart & I. Paeleman, 2010. "Cross-Border Venture Capital And The Development Of Portfolio Companies," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 10/694, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:10/694
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    File URL: http://wps-feb.ugent.be/Papers/wp_10_694.pdf
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    More about this item

    Keywords

    venture capital; cross-border; international; portfolio company development;

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • 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
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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