Venture capital and industry specialization : an empirical study of venture capital investments in Norwegian portfolio companies
Master thesis
Permanent lenke
http://hdl.handle.net/11250/2487324Utgivelsesdato
2017Metadata
Vis full innførselSamlinger
- Master Thesis [4378]
Sammendrag
Applying a carefully constructed data sample of 120 Norwegian portfolio companies being
backed by Norwegian Venture Capital firms, this thesis aims at answering how the degree of
industry specialization in Venture Capital firms affects the performance of portfolio
companies. This thesis applies three different measures of industry specialization, in which
two are derived from the literature on corporate diversification. Further, the thesis also
explores the effects of specialization at different industry levels. Lastly, having access to
detailed accounting information on Norwegian portfolio companies allows us to analyse
detailed performance measures in different time windows, by considering A) Increase in
profits, B) Increase in revenues, C) Revenue growth, D) Payroll growth and E) Productivity
growth.
We provide evidence of a positive relationship between the industry specialization of a
Venture Capital firm, and performance in portfolio companies. Considering specialization at
different industry levels, we find that industry specialization has a positive effect on the
performance of portfolio companies when Venture Capital firms specialize at industry section
level, and have portfolios with more than 40% of the investments in the same industry section.
We find that there is a positive effect from industry specialization if Venture Capital firms
invest in their preferred industry section, and a negative effect of industry specialization when
Venture Capital firms invest outside their preferred industry section.