Erik Engberg, Daniel Halvarsson () and Patrik Tingvall ()
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Erik Engberg: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Daniel Halvarsson: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Patrik Tingvall: Södertörn University, The Ratio Institute and the Swedish Agency for Growth Policy Analysis, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Abstract: This paper studies the real effects of venture capital on targeted firms. Specifically, using a unique dataset with comprehensive information on private- and governmental venture capital investments, we examine the effects of such investments on firms' sales, employment and investments in physical capital. The results suggest that both private and public venture capital boost firm sales two to three years after the investment. The sales increase can, in turn, partially be traced to an investment effect, and partially to increased efficiency, whereas no employment effects are found. Finally, our findings suggest that government investors are more prone than private VC firms to make follow-up investments in stagnating non-growing firms.
Keywords: Venture capital; Start-ups; Firm growth; Investments; Governmental venture capital
JEL-codes: C21; C23; D22; G24; G28; H44; L25; L26
43 pages, April 3, 2017
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