Analysis of the profitability of Spanish firms backed by Venture Capital. Period 2019-2022

Analysis of the profitability of Spanish firms backed by Venture Capital. Period 2019-2022

Abstract:

The main objective of this study, from a quantitative perspective, is to analyse and compare the economic performance of Spanish companies that have received financing from venture capital companies with that of other similar companies that have not had this type of support. In particular, it seeks to evaluate whether the participation of venture capital funds has a significant effect on the economic profitability of the companies in which they invest.

To this end, an empirical analysis has been carried out based on a sample of invested
and non-invested companies, paired according to similar characteristics such as size, industry and geographical location, among other relevant factors. This comparative approach makes it possible to isolate, as far as possible, the impact attributable to
the entry of venture capital, and not to other external variables that could influence corporate profitability.

The results obtained show that, at least in the short term, the inflow of venture capital does not translate into an immediate improvement in accounting profitability. The data suggests that, in the first years after investment, invested companies tend to experience a decrease in their profitability indicators. This finding could be related to the processes of restructuring, professionalization or accelerated growth that usually accompany the entry of these funds, and which may initially imply higher costs or lower operational efficiency

Keywords: Companies financed by Venture Capital; Return on assets; Return on invested capital; Sample matching.