ABSTRACT This paper investigates the role of Venture Capital (VC) in the likelihood of delisting via mergers and acquisitions (M&A) for European companies listed in the 2004–2014 period, till 2020. Takeovers of listed companies are generally associated with underperformance, suggesting a need for a change in corporate control. In contrast, we show that VC-backed listed companies are more likely to be acquired when they exhibit higher growth rates compared to their peers. Moreover, this effect is driven by companies backed by low-reputation VCs. These VCs are known to rush their portfolio ventures to IPO and to have a limited post-IPO involvement. These conditions, combined with strong growth, may attract acquirers who perceive a need for change in corporate control. Conversely, we find no evidence of an increased likelihood of delisting by M&A in companies backed by highly reputed VCs, which tend to remain independent.

The Indian stock market has become increasingly visible in recent years, stimulating the interest of shareholders in participating in publicly traded companies. The practice of listing has been extensively studied in recent years. Multiple analyses have been done to determine the value of listed companies across sectors on major stock markets. Research into the benefits of stock exchange listing and depictions of how listed companies perform operationally have yielded conflicting findings thus far. This study focuses on the impact of listing on the financial performance of venture capital-backed companies. This study analyses the fluctuations of Prataap Snacks Limited, a venture capital-backed firm that debuted on the National Stock Exchange on October 5, 2017. The goal of the study is to forecast and evaluate variables and outcomes that could affect Prataap Snacks Limited's listing. This study relies solely on secondary data collected from the annual reports of Prataap Snacks Limited for 10 years, starting from FY 2012–13 to FY 2021–2022. The collected data is dispersed up to +5 or -5 years from the date of listing. The factors used in the current study are profitability, liquidity, solvency, operational efficiency, and asset utilization capacity. The significance of the difference between the two variables was tested using a paired sample t-test, and the hypotheses were tested based on the means of the two variables. There appears to be a perplexing change in financial performance between pre- and post-listing, suggesting that variables respond differently to the listing event. The profitability and asset utilization capacity of Prataap Snacks Limited is shown to be unaffected by listing, whereas the firm's solvency and liquidity are significantly affected. KEYWORDS: Venture capital-backed IPO, Listing, Profitability, Financial functioning

ABSTRACT Drawing on signalling theory and using the cases of Alibaba and Coupang, we investigate whether and how venture capital-backed companies from emerging markets use CSR to overcome the liability of foreignness when going public in the US. Our findings suggest that such firms strategically increase their CSR activities prior to their IPO in order to signal legitimacy to investors. They also suggest that firms with both strong and weak CSR signalling strategies (as measured by signal cost, frequency and consistency) are equally likely to have successful IPOs when they are backed by reputable venture capital firms.

ABSTRACT In this paper, we use the essential dichotomy between independent venture capital (IVC) and corporate venture capital (CVC) to investigate the investment mechanisms that lead venture-backed companies to take different successful exit routes, that is, an initial public offering (IPO) or an acquisition. Through an analysis of a sample of 4206 US companies, we find that CVC-backed companies have a longer investment duration and a larger investment amount than IVC-backed companies. Our analysis reveals that geographic distance and industry-relatedness are influential for the success of the company. We show that industry-relatedness is more likely to lead to an acquisition exit while geographic proximity rather fosters IPO exits.

The Contracting and Valuation of Venture Capital-Backed Companies

Access to the Corporate Investors' Complementary Resources: A Leverage for Innovation in Biotech Venture Capital-Backed Companies

A Valuation Model of Venture Capital-Backed Companies with Multiple Financing Rounds

Getting Schooled: The Role of Universities in Attracting Immigrant Entrepreneurs

The Pricing of Private Assets: Mutual Fund Investments in ‘Unicorn’ Companies

Management Accounting Systems (MAS) can help start-up companies to manage resource allocation and satisfy investors’ information needs. This study helps to investigate the main features of MAS adopted by Italian venture capital-backed start-up companies. Also, the study aims to analyse how venture capitalists monitor their investment through management accounting. Thirty semi-structured interviews were carried out to gather information from a corporate and an investor perspective. Our results show that both start-up companies and investors consider MAS as useful to make conscious and target-oriented decisions. MAS are used by investors to monitor the investee’s performance and contribute in aligning goals’ time horizon. In addition, MAS help investors to develop a cooperative relationship with start-up companies and to provide business advices. This study contributes to the agency-theory debate by showing that MAS help not only to reduce information asymmetries but also to foster a dialogue and to benefit from investors’ human capital.

Squaring Venture Capital Valuations with Reality

We investigate the effect of public (PUVC) and private (PRVC) venture capital funds on the sales growth of 6513 European New Technology-Based Firms (NTBFs) during the period from 1992 to 2009. Our results show that PUVC-backed NTBFs underperform with respect to PRVC-backed ones and do not grow more than non–venture capital-backed companies. The impact of PUVC is still not statistically significant (even though it is positive) when PUVC funds target young NTBFs. The only notable exception suggesting a positive and statistically significant impact for PUVCs is when PUVC funds cofinance with PRVC funds, and both target young firms

We investigate relationships between the industry relatedness of venture capital-backed companies and their strategic acquirer in trade sales and the achieved investment returns of venture capitalists. Using a proprietary data set of 716 trade sales, we analyze return differences between lateral and synergetic trade sales, as well as between horizontal and vertical trade sales. We find that venture capitalists achieve higher returns with lateral rather than synergetic trade sales, and that the difference is greater for deals involving early stage companies characterized by strong information asymmetries. In addition, horizontal trade sales yield higher returns than vertical trade sales; however, in boom phases of the venture capital market, this effect reverses. Finally, we find that experienced venture capitalists are able to overcome disadvantageous situations in trade sales, resulting in comparable returns across all trade sale categories.

Toward a Venture Capital-Backed Entrepreneurship Model in Brazil

Measurement and Financial Economics Valuation

The behavior and determinants of market-to-revenue ratios in public and private capital markets is examined. Three samples are analysed: (1) all publicly traded stocks listed at some time on the New York Stock Exchange/American Stock Exchange/National Association of Securities Dealers Automated Quotation System in the 1980—2004 period; (2) sample of over 300 so-called ‘internet companies’ in the 1996—2004 period; and (3) over 5500 privately held venture capital-backed companies in the 1992—2004 period. Both company size and the most recent revenue growth rate are found to explain significant variation across companies in their market-to-revenue multiples — smaller companies and companies with higher recent revenue growth rates have higher multiples. We also document how the capital market appears to use a broad-based information set when setting market-to-revenue multiples for companies with negative revenue growth rates — transitory revenue growth components appear to be identified (in a probabilistic sense) by the capital market. Contrary to much anecdotal comment, we present evidence that the capital market behaved directionally along the lines predicted by capital market theory in the pricing of internet stocks in the 1996—2004 period.

Venture Capital Financing, Patenting, and Long-Run Performance of Private Acquisitions

We examine the post-Initial Public Offering (IPO) role of Venture Capitalists (VCs) in their portfolio companies' failures, employing a LOGIT analysis of a matched pair sample of defunct and successful VC-backed companies, and an Ordinary Least Square (OLS) analysis of the lifespan of the defunct set. We find that the reputation and experience of VCs are major factors in extending the lifespan of the defunct portfolio companies. We also find that VC monitoring, experience, reputation and percentage ownership are not significant factors to differentiate between failure and success. VCs are associated with high risk investments making failures inevitable, but surprisingly we find no credible reasons that are related to VCs' financial management for failures.

Examining an increasingly prevalent but under-researched phenomenon, cross-border venture capital investments, it is observed that local venture capitalists typically invest first, followed by foreign venture capitalists in later rounds. A model is developed that explains the role of a domestic venture capital investor in attracting foreign investors and which also accounts for the impact of various circumstances on the importance of this role. In our model based on analysis of nine cross-border venture capital-backed companies, local venture capitalists have several important roles in increasing the venture's cross-border investment readiness including advice to operational management and contributing contacts and local market knowledge. The importance of these roles is mitigated if the entrepreneurial team is highly experienced or if the home market is not important for the venture. The prominence of the local investor has signalling value. Finally, the local investor's international social capital facilitates the formation of cross-border syndicates. Overall, the model developed in the paper contributes to a better understanding of cross-border venture capital and in particular to the division of labour between domestic and foreign venture capitalists in international venture capital syndicates. The paper also contributes to the emerging literature on international social capital.

Employment Contribution of Private Equity and Venture Capital in Europe