Venture Capital Investments in Europe and Firm Productivity : Independent versus Corporate Investors

Using a new European Commission-sponsored longitudinal dataset – the VICO dataset – we assess the impact of independent (IVC) and corporate venture capital (CVC) investments on the total factor productivity (TFP) of European high-tech entrepreneurial firms during the period 1992-2010. After controlling for potential sources of endogeneity and selection bias, our results indicate that both IVC and CVC investments boost TFP, whereas investments syndicated by both IVC and CVC investors do not. These effects are mostly due to an increase in sales value. Moreover, the dynamics of the impact of VC investments on TFP and its components – sales value, fixed assets, and payroll expenses – differs depending on the type of investor