The Long-run Performance of VC-backed IPOs and Its Cross-sectional Determinants: European Evidence

Jan Winkhold

Student thesis: Master thesis


The existing academic literature on the long-run performance of VC-backed IPOs in Europe is relatively limited and displays variations in the empirical evidence found. This study attempts to contribute to the existing literature by exploring the VC-backed IPO performance and its crosssectional determinants in Europe using a sample of 2,632 IPOs, of which 330 have been backed by a VC firm, completed during a time period from 2000 to 2015, in 15 different Western European countries. Thereby, the study examines long-run performance and its determinants for IPOs completed in four different sub-periods, including the Technology Bubble and the Financial Crisis, in order to assess a potential period impact on long-run performance. The obtained results suggest that despite no consistent and significantly superior performance of the VC-backed IPOs is found, their relative performance versus non-backed IPOs improves over the four sub-periods examined. Cross-sectionally, it is found that the number of patents held at the IPO, as a proxy for the IPO issuer’s innovative capabilities, is positively associated with its long-run performance. Furthermore, the study finds that a VC IPO Market Share measure, as a proxy for the VC firm’s reputation, in contrast to the US, is not positively associated with long-run IPO performance, while alternative reputation measures, such as the age of the VC firm, appear to be more suitable as a reputation proxy in Europe. Finally, the study calls for further US-based research on a number of cross-sectional determinants, which carry theoretical relevance, but no statistical significance in the European market.

EducationsMSc in Finance and Investments, (Graduate Programme) Final Thesis
Publication date2019
Number of pages95