A study of over 800 venture capital backed companies in Europe has found that independent venture capital is demonstrably more effective than state-backed or corporate VC.
The aim of the VICO project, carried out by a group of business schools and universities from the UK, Belgium, Italy, France, Spain, Germany, Finland and Italy, was to develop an in-depth understanding of how companies backed by venture capital evolve over time and how the diversity in the European VC market has an impact on that development.
The key finding was that, although venture capital invariably has a positive impact on company development regardless of its source, businesses with access to independent VC are likely to be more successful than those with corporate or government-backed VC.
However, the study also found that a mix of sources, whether of independent and government-backed VC or a mix of local and international VC, is desirable and that investment coming from a source with previous experience in the recipients’ sector leads to higher future performance.
One of the lead researchers, Professor Sophie Manigart from Vlerick Leuven Gent Management School, says: “This research was designed to help policy makers, VC firms and companies looking to source VC investment. The findings clearly show that experienced, independent VC firms have a different approach and a different set of goals for how they want their companies to develop. Companies with access to independent and a mix of international and local VC grow quicker in terms of sales and employees. And VC-backed companies with access to a mix of both independent and public VC are far more innovative in their approach to business.”
“From a policy point of view, we would very much encourage more cross border VC initiatives and more public/private VC initiatives. VC is very important for the future growth of business in Europe and its value goes far beyond the provision of funds. Firms offer access to large networks, they professionalise management and they professionalise company boards.”
