The effects of initial firm configuration and VC involvement on future firm growth: a case of picking or forming winners

Paper in proceeding, 2015

The main objective of our study is to explore to what extent the long-term performance of new firms is the result of initial firm configurations or VC’s involvement during the investment period. Our analysis among new VC-backed firms in Sweden over their full venture capital cycle gives strong support for the effect of initial funding conditions on the long-term growth of new firms. VC involvement, on the contrary, has much more marginal role in explaining long-term growth. In fact, VCs involvement seems to occur when firms are in trouble (i.e. “fire-fighter” role).