Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/196152
Authors: 
Pavlova, Elitsa
Signore, Simone
Year of Publication: 
2019
Series/Report no.: 
EIF Working Paper No. 2019/55
Abstract: 
This paper examines the impact of venture capital (VC) investments supported by the EIF on the financial growth and performance of young and innovative firms. Using a novel dataset covering European start-ups supported by VC in the years 2007 to 2014, we generate a counterfactual group of non-VCbacked firms through a combination of exact and propensity score matching. To offset the relatively limited set of observables allowed by our data, we estimate treatment propensity using a series of innovative measures based on machine learning, network theory, and satellite imagery analysis. Our results document the positive effects of EIF-supported VC investments on start-up performance, as measured through various financial indicators (e.g. assets, revenue, employment). We find that VC financing enables start-ups to prioritise long-term growth, trading off short- to medium-term profitability if necessary. Overall, our work provides meaningful evidence towards the positive effects of EIF-supported VC investment on the financial growth of young and innovative businesses in Europe.
Subjects: 
EIF
venture capital
public intervention
real effects
start-ups
machine learning
geospatial analysis
network theory
JEL: 
G24
L25
M13
O38
Document Type: 
Working Paper

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