Does the Internationalization of Investors Provide Value for Private Firms?

Abstract

We examine the impact of internationalizing the investor base of private firms through international venture capital syndication on portfolio company exit and exit success. Our empirical results suggest that an international scope in venture capital syndicates plays an important role in both portfolio firm outcome and exit success. Specifically, we find that relative to deals in which the investor base is purely domestic, private firms that have an international venture capital syndicate have a higher probability of exiting via IPO, higher total deal value when exiting via M&A and higher proceeds when exiting via IPO. Importantly, the amount of internationalization is important. In many cases, the relationship between internationalization and portfolio company outcome and exit success is nonlinear.