VALUE-ADDED ACTIVITIES IN VENTURE CAPITAL AND THE EFFECTS OFSTAGE: AN EMPIRICAL STUDY
SUMMARY OF FINDINGS
This thesis explores how Venture Capital funds’ value-added activities differ betweenstage and if the Venture Capital funds specialize accordingly.We used a survey targeting 275 venture capital deals from Danish-based Venture Capitalfunds operating within ICT or Life Science. The survey consisted of 28 questions on theperceived contribution of the VC funds in various value-added activities, as well as amaximum of 37 questions on the characteristics of the firm, the founders, the deal, andthe level of interaction with the fund.We obtained 69 usable responses, and through that the effect of the stage on the portfoliocompanies’ perceptions was analysed. These are our main findings:
We find significant differences between portfolio companies’perceptions of their funds’ contribution. This implies that a portfolio companyshould, to the extent it is possible, choose a fund based not just of money, but onthe specific needs of the firm
8 distinct areas of value-add
: We confirmed that Venture Capital funds add valuewithin at least 8 overarching areas: Strategy, Technological position, Marketposition, Professionalization, Financing, Credibility, Internationalization, and Exitorientation.
Value-added activities differ:
We find significant differences between theimportance of these 8 areas of value-added. Portfolio companies in our sample, onaverage, ranked the funds’ contributions within Credibility, Professionalization,Finance, and Strategy to considerably more important than the rest.
3/8 value-added activities depend on stage:
We find that the perceivedimportance of Venture Capital funds’ activities differs across portfolio companystages for Strategy, Market position, and Credibility. We find no difference acrossstages, however, for the remaining 5 areas of Technology position,Professionalization, Finance, Internationalization, and Exit orientation.
Funds specialize in stages:
We find that some Venture Capital funds specialize instage, in order to deliver focused value-added activities within Strategy, Marketposition, and Credibility.