The survival of venture capital backed companies

Abstract

This study addresses the survival of Belgian venture capital (VC) backed companies, compared to companies that did not receive VC. Survival analysis techniques are used to analyse the survival of a sample of 565 Belgian VC backed companies and 565 comparable non-VC backed companies. A distinction between different types of venture capitalists is made. Contrary to commom wisdom, VC backed companies do not have a higher probability of surviving than comparable non-VC backed companies. Companies, backed by the two oldest government venture capitalists, however, have a higher survival rate and companies, backed by other government venture capitalists have a lower survival rate and a higher probability of going bankrupt. Our results confirm previous studies in that it is shown that receiving VC from the right backer is perhaps more important than receiving VC per se.