The impact of venture capital on the economic performance of entrepreneurial ventures in Europe
Financial investment such as VC has been behind the success of numerous high-potential, start-up companies and has spurred growth across the world. The EU has seen its fair share of successes under this model and has strived to identify the exact impact of VC financing on the performance of innovative, enterprising ventures. This was the mandate of the EU-funded project VICO (Financing entrepreneurial ventures in Europe: Impact on innovation, employment growth, and competitiveness). Project partners assessed the impact of VC financing on the economic performance of innovative entrepreneurial ventures in Europe as reflected in their innovation rates, employment creation, growth and competitiveness. They also analysed the role that VC investors play in helping these firms bridge their resource and competence gaps. The VICO team created a large-scale longitudinal data set on European high-tech companies and VC investments. It examined VC policies in France, Finland and the United Kingdom. Collected information was supplemented by an extensive web-based survey addressed to both companies and VC investors. Findings reveal investors do indeed boost a company’s productivity and growth, even during times of financial crisis. They show that the impact of VC investors is significantly higher than previously documented, with success depending more on investors’ guidance rather than on selection of firms. Another important finding was that government investments in firms younger than five years were more successful than older firms. However, the age of a firm played a negligible role where university VCs were concerned. On another front, much of the successful investment portfolio depended on cross-border VC initiatives, pointing out a useful and valuable trend in the EU. Five policy briefs disseminated outcomes, summarised policy lessons learned from findings and made several recommendations. VICO outcomes can help shape investment types and decisions in the future, encouraging innovation and influencing economic growth in unprecedented ways.
Keywords
Venture capital, economic performance, entrepreneurial ventures, VICO
