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EPRC is a leading institute in Europe for comparative research on public policy, with a particular focus on regional development policies. Spanning 30 European countries, EPRC research programmes have a strong emphasis on applied research and knowledge exchange, including the provision of policy advice to EU institutions and national and sub-national government authorities throughout Europe.

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Does venture capital pay off? a meta-analysis on the relationship between venture capital involvement and firm performance

Rosenbusch, Nina and Muller, V. (2010) Does venture capital pay off? a meta-analysis on the relationship between venture capital involvement and firm performance. Frontiers of Entrepreneurship, 30 (3).

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Abstract

Venture capital (VC) as an alternative to mainstream corporate finance (Wright and Robbie, 1998) has attracted a large amount of interest in academic research and among practitioners. On e of the main questions is whether VC adds value to firms. Yet, empirical research results are highly inconsistent. Venture capitalists do not only provide capital and monitoring, but also actively assist firms with industry-specific knowledge and skills (MacMillan et al., 1989). Furthermore, they increase the legitimacy of entrepreneurial firms (Zimmerman & Zeitz, 2002). On the other hand, venture capitalists may pressure firms to an initial public offering (IPO) in a premature stage of their life cycle (Gompers, 1996). High costs associated with an IPO may, in turn, decrease profitability and even endanger the survival of firms. Whether venture capital really pays off, thus, largely depends on contextual factors. The aim of this study is to provide a review and synthesis of existing empirical research on the relationship between VC and firm performance. Specifically, we intend to answer two research questions: (1) Does VC increase the performance of firms? (2) Which variables moderate this relationship?