Research

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

Abstract: Past studies argue that firms must balance dependence on partners for resource access against possible problematic partner behavior and therefore choose some partners over others. We argue that firms can attract resources and defend themselves against problematic partner behavior by simultaneously partnering with different types of partners — a “divide-and-conquer” defense. We employ instrumental-variable regressions and matched-sample analyses to show that UK technology ventures adopting this defense in their first interaction with equity investment partners are less likely to experience subsequent founder-CEO replacement and more likely to secure follow-on funding. Especially ventures with more cash and entrepreneurs with relevant experience, employ this divide-and-conquer defense. Our study reveals that some entrepreneurs proactively shape their partner dependence, and enriches resource dependence theory and the venture finance literature. 

The Family Office Effect: How Ownership Style Shapes Portfolio Firm Strategy - with Cristina Cruz and Juan Santalo

Abstract: We examine how family offices (FOs) differ from private equity (PE) and venture capital (VC) investors in terms of ownership preferences and explore the strategic implications of these differences for portfolio companies, the companies they own. We hypothesize that FOs pursue more distinct investment strategies, maintain longer holding periods, and govern portfolio companies 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 18% more distinct—i.e., deviating from average market industry allocations—and maintain investments 34% longer on average. Moreover, FO-backed firms exhibit 12% higher profitability and 21% reduced firm growth 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 shapes firm strategy.

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

Abstract: We examine how family ownership shapes firm responses to employee health shocks using Dutch matched employer–employee administrative data. Following a health shock, family firm employees experience 2% annual earnings penalties following severe health shocks at the overall and intensive margin. This effect is driven by reduced working hours and wage adjustments and is more pronounced among female, younger, and geographically distant workers. At the extensive margin, family firm employees are less likely to switch employers, but conditional on switching, do so later and disproportionately switch to other family firms. Five complementary tests, including on monthly employment records and hand-collected survey evidence, suggest that these effects reflect employee-driven flexibility rather than employer exploitation. Results persist when exploiting within-firm ownership changes and restricting to exogenous health conditions. Family firms provide implicit insurance through accommodation, though employees absorb income losses.

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.

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.