Venture-Capital Financing and the Growth of Startup Firms

Venture capital firms have unique capabilities in terms of dealing with high uncertainty, high degrees of information asymmetry, and providing access to a strategic network. This study examines the association between the presence of venture capital and the growth of startups. It explores whether venture capital leads to growth or, alternatively growth signals the need for venture capital. It also investigates the impact if any of venture capital financing events and the growth of these firms. Finally, it documents the relationship between growth in startup financial valuation and changes in the number of employees over successive rounds of financing.