A longitudinal study on the impact of cross-border venture capital on portfolio company growth

We study the effects of obtaining initial finance from cross-border venture capital investors—as opposed to only domestic venture capital investors—on the growth pattern of venture capital backed companies. Using a ten-wave longitudinal research design and a random coefficient modeling approach, we track sales, employment and total assets within 766 European high-tech companies that initiate investment relationships with venture capital firms. Findings indicate that companies backed by cross-border investors are larger in terms of sales, employment and total assets at the time of the initial investment. Companies backed by domestic investors have higher instantaneous growth rates when studying growth in sales and total assets, but these growth rates diminish more quickly over time compared to the growth rates of companies backed by crossborder investors.