Venture capital financing is a form of financial intermediation that provides financial resources and specific skills and competences to backed-firms. Particularly, VCs may affect board composition and corporate governance of backed companies, as well as support them in funding, strategy formulation, filling in the management team and structuring extraordinary transactions. Our empirical research tries to answer to the following research questions: (i) How do VCs affect corporate governance of backed firms? (ii) How do VCs impact on backed firms’ management composition, skills, practices, as well as behaviours? (iii) How do VCs affect backed firms’ growth processes and financial structure? We studied eight Italian companies which received a minority financing by a venture capital fund. We chose firms that are different in terms of business sector, dimension (sales, number of employees and total assets), VC fund type, equity stake acquired by VC fund etc. We found that VCs impose their representation, but never hold the majority, in backed firms’ boards. Nevertheless, they do not lead to change corporate governance structures. Similarly, they do not impose managerial changes, but prefer to cooperate with existing top management team by frequent, informal interactions. VCs seem to support significantly backed firms in building or reinforcing their skills and competences in many functions or domains. With reference to growth strategies, VCs invest in companies of different sizes but all engaged in intense growth processes. More importantly, they do not lead to accelerate growth, but, rather, to reorient it in new, relatively unexplored directions such as M&A and internationalization. They also help control leverage, but do not have a determinant role in that. Hence, Italian VCs usually adopt an approach that is somehow between the typical “hands-on” and “hands-off” style.

Corporate Governance, Growth and Strategic Changes in Italian Venture-Backed Firms

ROMANO, GIULIA;
2010-01-01

Abstract

Venture capital financing is a form of financial intermediation that provides financial resources and specific skills and competences to backed-firms. Particularly, VCs may affect board composition and corporate governance of backed companies, as well as support them in funding, strategy formulation, filling in the management team and structuring extraordinary transactions. Our empirical research tries to answer to the following research questions: (i) How do VCs affect corporate governance of backed firms? (ii) How do VCs impact on backed firms’ management composition, skills, practices, as well as behaviours? (iii) How do VCs affect backed firms’ growth processes and financial structure? We studied eight Italian companies which received a minority financing by a venture capital fund. We chose firms that are different in terms of business sector, dimension (sales, number of employees and total assets), VC fund type, equity stake acquired by VC fund etc. We found that VCs impose their representation, but never hold the majority, in backed firms’ boards. Nevertheless, they do not lead to change corporate governance structures. Similarly, they do not impose managerial changes, but prefer to cooperate with existing top management team by frequent, informal interactions. VCs seem to support significantly backed firms in building or reinforcing their skills and competences in many functions or domains. With reference to growth strategies, VCs invest in companies of different sizes but all engaged in intense growth processes. More importantly, they do not lead to accelerate growth, but, rather, to reorient it in new, relatively unexplored directions such as M&A and internationalization. They also help control leverage, but do not have a determinant role in that. Hence, Italian VCs usually adopt an approach that is somehow between the typical “hands-on” and “hands-off” style.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11568/139083
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