Performance Dynamics of Venture-Financed Firms - An Empirical Study of the Swedish Venture Capital Market

Abstract

This paper investigates the performance of a sample of 154 venture capital (VC)-financed and 154 non-VC-financed firms from birth to exit on the Swedish market between the years 1998 and 2011. We find that VC-financed firms achieve higher growth rates in sales than a matched sample of non-VC-financed firms. Somewhat contradictory we also find that non-VC-financed firms show significantly higher profit margins. For a subsample of 59 firms we conclude that the profit of VC-financed firms grow at a significantly higher rate after the time of investment than before, indicating a monitoring effect provided by VC-firms. We also examine a potential relationship between the experience of VC-firm and performance of VC-financed firm but find no significant relationship.