The influence of venture capital funding on firm performance and time to initial public offering.

摘要

Venture Capitalists (VC) bring more than just equity financing to Entrepreneurial firms. They generally infuse the firm with their own expertise. This is done in part to help to protect their investment and at the same time to insure that the firm is working towards the VC's goals of receiving a relatively quick and above average return on the investment.;This research examines the agency relationship between the VC and Entrepreneur. This is not a normative use of agency theory, that is, it will not be structured so as to prescribe the appropriate contractual form between principal and agent, but instead recognizes that the contractual form has already been established. It is the effect of this contract on the firm's performance that is of interest in this research.;The major research question addressed in this paper is "Does the presence of venture capital in recipient firms lead to their superior performance vis-a-vis non recipient firms?" This question will be framed within the context of the VC's two objectives--a relatively quick and high rate of return--and the entrepreneur's objective of building a strong firm.;Venture Capital recipient firms were found to go public at a significantly quicker rate than non-recipient firms. However, this finding did not hold for all firms. When examining firms that went public in a short period of time, defined as less than three years, more nonrecipient firms went public in less time than did the VC recipient firms. No differences were found between the two groups when examining the three financial performance criteria of profit margin, return on investment, and average earnings yield.