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I'm gonna live forever: realities of long-term post investment performance for venture-backed enterprises

Reid, J.G.C. and Smith, J.A. (2006) I'm gonna live forever: realities of long-term post investment performance for venture-backed enterprises. In: Frontiers of Entrepreneurship Research. Babson College, Massachusetts, Untited States of America. ISBN 0910897263

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Abstract

This paper constructs a model of long-run performance for SMEs that have received venture capital backing. The model explains performance by financial structure. FAME data are used for estimating performance equations over the period 1989 to 2004 for UK businesses in their post-investment period. The econometrics uses robust techniques, including least absolute error (LAE) and Tukey trimean estimation. It is shown that the key determinants of performance (measured by ROSF) are profit margins and risk, with lesser, but significant, roles played by liquidity and gearing. The sample is used to identify consistently high performers, and chronic low performers. From the latter group, two detailed case studies illustrate how chronic low performance can emerge, in each case caused by failure to achieve technological milestones, and thereby failing, ultimately, to convince investors of potential company worth.

Item type: Book Section
ID code: 8591
Notes: Also present at ID 2834
Keywords: venture capital, investment performance, LAE estimation, research milestones, business, Curriculum
Subjects: Education > Theory and practice of education > Curriculum
Department: Faculty of Education > Mathematics, Science and Technology Education
Strathclyde Business School > Accounting and Finance
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Depositing user: Strathprints Administrator
Date Deposited: 12 Oct 2009 15:05
Last modified: 12 Mar 2012 10:49
URI: http://strathprints.strath.ac.uk/id/eprint/8591

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