The Impact of Venture Capital on Family Businesses : Evidence from Spain

We analyze growth in family and non-family Spanish venture capital-backed firms. When the venture capital firm (VC) does not hold a majority stake, the usual risk aversion attitudes in family firms may lead to conflicts between the management cultures of the existing and new shareholders, which may affect growth. We find lower firm growth after the initial round in family firms only when the investor holds a minority stake. Our results may explain the under-representation of family firms in VC portfolios and highlight the need to align the objectives of family managers and VC investors before the initial VC round