The Impact of Venture Capital on Companies' Post-IPO Performance Theory and Evidence for European Venture Capital-backed Companies Listed Between 2010-2017

Philip Hofmeister & Jan Leptien

Student thesis: Master thesis

Abstract

In this thesis, we investigated the impact of venture capital on the short-run and long-run post IPO performance of European companies, adopting a sample of 40 European companies going public between 2010 and 2017. To identify the impact of VC-related determinants on the short-run and long-run post-IPO performance, we conducted multiple linear regressions. We further complemented our research by conducting interviews with four industry experts. Investigating short-run performance, we found that European VC-backed companies were overpriced on the first day of trading. Nevertheless, we did not find significance for the impact of VC determinants. Considering the short-run performance within the first month, we observed that our sample companies were in total overvalued. Examining the impact of VC-determinants on levels of overvaluation reveals significance especially for the share of independent VC firms of a VC firm syndicate. Higher shares of independent VC firms result in lower performance of our sample companies during the first month of trading measured against a market benchmark, indicating higher levels of overvaluation. Regarding the long-run performance, we detect that our sample companies underperform the market benchmark. However, we did neither find significance for the impact of VC determinants nor for the impact of companies post-IPO short-run performance on the long-run.

Educations, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2019
Number of pages161
SupervisorsSteffen Brenner