Research

Divide and Conquer: Equity Investor Type Diversity as a Defense Mechanism in Technology Ventures - with Tom Vanacker and Sophie Manigart

Abstract: Past studies show that dependence on partners for resources also exposes firms to possible problematic partner behavior, against which firms try to defend themselves. We extend our understanding of resource dependence in entrepreneurial ventures by developing and testing a novel framework on how and which ventures can defend themselves in their first interaction with equity investors when established defenses are usually unavailable. We theorize and show that ventures with greater resource stocks (i.e., higher ex-ante cash holdings and prior experience with multiple investor types) defend themselves by pursuing a "divide and conquer"-strategy in which they attract first-round investments from different types of equity investors. This strategy also facilitates follow-on fundraising. Overall, we extend resource dependence theory by focusing on a novel "divide and conquer"-defense strategy, which limits the power of any individual investor type, and by presenting a dynamic view on resource dependence in which entrepreneurs employ this defense at a stage where they are more powerful because they still hold greater resource stocks.

The Strategic Influence of Family Office Investments on Portfolio Companies- with Cristina Cruz and Juan Santalo

Abstract: This paper examines how family offices (FOs) differ from private equity (PE) and venture capital (VC) investors, and explores the strategic implications of these differences for portfolio companies. We hypothesize that FOs pursue more distinctive investment strategies, maintain longer holding periods, and govern portfolio firms with a greater emphasis on profitability over short-term growth. Using a dual-matched sample of investments by FOs, PE, and VC funds, we find empirical support for these hypotheses. Compared to other investors, FOs hold portfolios that are 16% to 24% more idiosyncratic—deviating from standard market allocations—and maintain investments 34% longer on average. In terms of the "how they own" dimension, FO-backed firms exhibit 12% higher profitability and 21% smaller firm size over the post-investment period. These effects are most pronounced in FO solo and PE-related investments. Overall, our findings indicate that FOs chart distinct strategic trajectories for their portfolio companies and contribute to a deeper understanding of how ownership type shapes firm strategy.

A Survey of the Decision-making and Investment Practices of European Venture Capitalists - with Benjamin Le Pendeven, Anna Söderblom, Massimo Colombo, Massimiliano Guerini, José Martí Pellón, Sophie Manigart, and Christian Fisch

Abstract: Venture capital (VC) markets, shaped by different institutional contexts, have experienced disparate growth globally. While existing literature predominantly associates institutions with VC activity, we have a limited understanding of their influence on VC practices. We provide valuable new insights by comprehensively surveying 611 Continental European VC managers. Comparing their practices with US counterparts, we unveil significant heterogeneity, particularly in investment selection, valuation methods, and perceived drivers of investment performance. These findings underscore the pivotal role of institutions in shaping VC practices, offering crucial insights into this less-explored dimension of the global VC landscape. Implications further extend to investors, entrepreneurs, and policymakers.

Socioemotional Wealth and the Social Behavior of Family Firms - with Luc Renneboog

Abstract:  This study explores how socioemotional wealth (SEW) heterogeneity guides family firms’ social behavior. Drawing from behavioral agency and social capital theories, we argue that family firms invest in social capital according to the SEW dimensions they value most. Survey evidence from over 900 private family firms reveals that internal SEW considerations drive longer employee tenures but lower governance, while external SEW considerations drive higher community contributions and product introductions. Resource availability and risk-taking do not moderate these patterns. Embracing a multidimensional SEW perspective, our research contributes to unraveling the intricate and heterogeneous role of SEW in shaping family firm strategy.

Workforce Vulnerability: Employment Outcomes in Times of Crisis - with Luc Renneboog

Abstract: We examine how corporate ownership influences firms’ responses to employee health shocks, a salient but understudied dimension of labor adjustment. Using Dutch matched employer–employee administrative data, we study the employment effects of severe illness, focusing on differences between family and nonfamily firms. We document no pre-treatment differences in health status across ownership types. However, following a health shock, family firm employees experience larger earnings losses at the intensive margin, driven by reduced working hours rather than wage adjustments. These effects are more pronounced among female, younger, and geographically distant workers. At the extensive margin, family firm employees are less likely to change employers, but conditional on switching, do so more quickly and disproportionately transition to other family firms. We also document spillovers to partners’ labor outcomes, household income, and family composition. The findings suggest that family owners emphasize job retention and flexibility over separation, illustrating the layered influence of ownership structure on firms’ adjustment margins during employee health shocks.

Navigating the Aftermath: Equity Investors and the Trajectory of Failed Ventures

Objective: Most ventures that receive equity funding eventually fail. Despite substantial scholarly focus on the impact of equity investors during the investment period and their role in influencing failure probabilities, we have a limited understanding of how, to what extent, and under what circumstances investors shape the post-failure path of funded entrepreneurs. Leveraging data from 70,000 funded European ventures meticulously paired with non-funded counterparts based on pre-failure characteristics over time, this study offers a timely and more holistic perspective on the role of equity investors. It seeks to illuminate their influence beyond the investment period, shedding light on the comprehensive dynamics of funded ventures post-failure.

Health Shocks and the Survival of the Entrepreneurial Firm - with Daniel Kárpáti and Luc Renneboog

Objective: We investigate the impact of entrepreneurial health shocks on firm performance and entrepreneur outcomes. This is important as it addresses the significant yet underexplored effects of health crises on entrepreneurial venture survival and growth. Using population-level data and a matched sample of entrepreneurial ventures, comparing those whose entrepreneurs experience health shocks with similar firms whose entrepreneurs remain healthy, we analyze key outcomes such as revenue growth, asset growth, employee numbers, and survival rates. This research offers valuable insights into the resilience of entrepreneurial ventures and the broader economic implications of health shocks on entrepreneurs.

Financing Intangibles: Is There a Market Failure? - with Sophie Manigart, Tom Vanacker, and Mirjam Knockaert. Article Link

Abstract: Intangible assets improve firms’ performance because of increasing absorptive capacity as well as the ability to innovate, use of new technologies, more flexible market adaptation, and higher productivity. While intangible assets are important for most growth companies, it is argued that intangible asset-based funding is not readily available due to the low perceived market value and tradability of these assets. Hence, the financing of intangibles might pose significant difficulties for growth companies. In this article, we present a method to assess whether European growth companies suffer from a debt-financing gap for their investments in intangible assets.