Dipartimento di Ingegneria Gestionale

Venture capital and business angel financing

About the project

The research, carried out by the EFI (Entrepreneurship, Finance and Innovation) research group, aims at investigating venture capital and business angel financing and their effects on the performance of start-ups, with special attention to Europe. It applies advanced data analytics, semantic analysis tools, and panel data econometric techniques to large-scale longitudinal firm level datasets, like the VICO 4.0 dataset on European VC-backed start-ups. The research has obtained funding from the European Commission through the FP7 VICO and RISIS1 project, and the Horizon2020 RISIS2 project.

Principal Investigators:  Massimo G. Colombo, Annalisa Croce, Massimiliano Guerini

Researcher team:  Vincenzo Butticè, Luca Grilli, Silvia Stroe, Francesca Tenca, Benedetta Montanaro, Kamilla Voznuk

Funders: European Commission

Duration: 2008-ongoing

Partners: Multiple

KEY RESEARCH QUESTIONS

The research, carried out by the EFI (Entrepreneurship, Finance and Innovation) research group, aims at investigating venture capital and business angel financing and their effects on the performance of start-ups, with special attention to Europe. It applies advanced data analytics, semantic analysis tools, and panel data econometric techniques. It takes advantage of a proprietary large-scale longitudinal firm-level data infrastructure, including notably the VICO 4.0 dataset. In addition to accounting information, VICO 4.0 tracks the investment history of more than 24,200 Venture Capital (VC) backed start-ups based in 28 European countries and Israel, representing the most complete and detailed longitudinal data infrastructure on European VC market. The research has obtained funding from the European Commission through the FP7 VICO and RISIS1 project, and the Horizon2020 RISIS2 project. In RISIS2 the data infrastructure will be enriched and extended through the development a new set of indicators, aimed at mapping start-ups’ patterns of innovation in business models and organizational processes, and the inclusion of data on the ownership and governance of VC funds. The new infrastructure will be fully inscribed into the open science approach.

This research has great visibility in the international scientific community, and great impact on practitioners and policy makers, through its practice-oriented activities. The results of this research have been published in top management, entrepreneurship and innovation journals, including the Strategic Management Journal, the Journal of Business Venturing, Entrepreneurship Theory & Practice, the Strategic Entrepreneurship Journal, and Research Policy. They have also been disseminated through keynote speeches at prominent scientific (DRUID) and practice-oriented (EIF annual meeting) conferences. They have been extensively used as an input to policy making activity (e.g. by the European Commission in the preparation of the COSME program) and have been extensively covered by the national and international economics and finance press, including the Economist.

  • What are the patterns of investment of VC in Europe?
    Research investigates differences in the patterns of investment of VCs depending on their ownership and governance, and factors driving matching between entrepreneurs and investors.
  • What is the geography of VC in Europe and its influence on entrepreneurs’ behaviour?
    Research provides evidence on the emergence and agglomeration of VC hubs and clusters of VC-backed start-ups, and the impact of the geography of VC on entrepreneurs’ demand for external equity.
  • What is the impact of VCs and BAs on the performance of portfolio companies? Through which mechanisms different types of VC and BA investors add value to their investee firms?
    Research investigates the “treatment” effect of VC on portfolio firms’ performance (e.g. growth, innovation, access to subsequent funding, exit). It focuses on differences in the treatment effect of different types of investors (notably, private and public, independent and corporate)

OUTPUTS & IMPACTS

  • Croce, A., Martí, J., & Murtinu, S. (2013). The impact of venture capital on the productivity growth of European entrepreneurial firms: ‘Screening’ or ‘value added’ effect?. Journal of Business Venturing, 28(4), 489-510.
  • Grilli, L., & Murtinu, S. (2014). Government venture capital and the growth of European high-tech entrepreneurial firms. Research Policy, 43(9), 1523-1543.
  • Bertoni, F., Croce, A., & Guerini, M. (2015). Venture capital and the investment curve of young high-tech companies. Journal of Corporate Finance, 35, 159-176.
  • Colombo, M. G., D’Adda, D., & Pirelli, L. H. (2016). The participation of new technology-based firms in EU-funded R&D partnerships: The role of venture capital. Research Policy, 45(2), 361- 375.
  • Colombo, M. G., & Shafi, K. (2016). Swimming with Sharks in Europe: When are They Dangerous and What Can New Ventures Do to Defend Themselves?. Strategic Management Journal, 37(11), 2307-2322.
  • Guerini, M., & Quas, A. (2016). Governmental venture capital in Europe: Screening and certification. Journal of Business Venturing, 31(2), 175-195.
  • Cumming, D. J., Grilli, L., & Murtinu, S. (2017). Governmental and independent venture capital investments in Europe: A firm-level performance analysis. Journal of Corporate Finance, 42, pp. 439-459.
  • Colombo, M. G., & Murtinu, M. (2017). Venture Capital Investments in Europe and Portfolio Firms’ Economic Performance: Independent versus Corporate Investors. Journal of Economics & Management Strategy, 26(1), 35-66.
  • Bertoni, F., Grilli, L., D’Adda, D. (2018). Self-selection of Entrepreneurial Firms in Thin Venture Capital Markets: Theory and Empirical Evidence. Strategic Entrepreneurship Journal, forthcoming.
  • Colombo, M.G., D’Adda, D. Quas, A. (2019). The geography of venture capital and entrepreneurial ventures’ demand for external equity, Research Policy, forthcoming.

PARTNERS

EMLYON Business School, Université Paris-Est Marne-la-Vallée, VU University Amsterdam, University of Manchester, Leiden University, Università della Svizzera italiana, University of Sussex, Austrian Institute of Technology, Nordic Institute for Studies in Innovation, Research and Education, Spanish National Research Council, German Centre for Higher Education Research and Science Studies, Joanneum Research, Fraunhofer Institute, University of Mannheim, University of Florida, Università di Roma-La Sapienza, Università Politecnica delle Marche, Consiglio Nazionale delle Ricerche,