Effects of Venture Capital on Innovation Finance Essay

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To start a successful business activities or plan to expand a current company, an entrepreneur needs a certain amount of capital. Actually, there are several options for start-up or expanding financing, but mainly, the possible sources of funding can either be internal or external. Use of internal funds such as personal savings, family and friends is most likely for small starting business. However, for expansion stages or big projects, external financing in the form of debt or equity is more suitable. In particular nowadays, one of the most popular equity financing used for start-up companies is the venture capital (VC).

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VC is money invested in high risk start-ups by venture capitalists on behalf of institutional investors with the aim of making outsize returns. The origin of VC in its modern form may be traced to General Doriot, who established the American Research and Development Fund (ARD) at the Massachusetts Institute of Technology (MIT) in 1946. Respectively, the first VC companies in Germany were founded in the middle of the 60s. The current measures of VC investments are significantly low due to the financial crisis of 2007-2010: 18,3 billion USD in the US and 2,7 billion EUR in Germany for 2009, respectively, 16,7 billion USD in the US and 3,3 billion EUR in Germany till the 3rd quarter of 2010. [1] In spite of the fact that, the VC investments are very small percentage of the countries’ GDP, the returns from those investments are at very high level. [2

Nowadays, innovation is consistently associated to be one of the most important characteristic of success. Many high-growth small and medium sized enterprises (SMEs) that are very successful in their field are significantly connected to innovation. Moreover, those innovative-enterprises typically accomplish stronger growth or are more successful than enterprises that do not innovate. Similarly, entrepreneurs that gain market share and increasing profitability are those that innovate. [3] For this reason, many governments around the globe try to duplicate the success of the U.S. VC industry. These attempts share a common logic that VC has spurred innovation in the US, and can do so elsewhere. [4] Therefore, VC could be a catalyst for innovation that serves as an important industry’s source for job growth, economic development and wealth. [5

In this seminar paper I investigate the correlation between the venture capital investments and the translation into innovation, namely, whether venture capitalists are catalysts for innovation or if they simply exploit it. The research is also focused on whether the collapse of venture capital, due to extraordinary internal or external processes e.g. investments bubbles or financial crisis, has crucial effect on innovation.

1.2 Structure of the analysis

What I examine, my concerns, what I find in each of the main subtopics or paragraphs: short, clear, exact review.

The remainder of the paper has the following structure. Chapter 2 describes how venture capital works and discusses what role it plays in financing innovative start-ups. Chapter 3 presents. In Chapter 4 I build. The final Chapter 5 summarises the most important findings, formulates conclusions and suggests further research topics.

2 Background and overview of venture capital industry

Venture Capital is long term equity capital invested in new and rapidly expanding innovative entrepreneurs. Generally, start-up and other emerging enterprises lack the collateral, track of records, or earnings required to get a loan and thus the traditional debt financing is not always available to them. Most enterprisers seek initial seed capital from family members, friends or wealthy individual investors, also known as “business angels,” who are willing to take the risk associated with start-ups in return for a proportion of the company equity.

Professionally managed venture capital firms provide the most notable venture capital money. An informal network of investors supplies the funding of these firms, it includes: insurance companies, bank holding companies and their affiliates, pension funds, endowment funds, foundations, corporations, wealthy individuals, foreign investors and the venture capital professionals. Venture capital professionals in this respect are the primary agents between new enterprises and capital sources. The typical process of VC fundraising consists of four steps – investment, value creation and exit. [6

The enterprises in which venture capitalists invest are generally unproven and high-risk, but the main expectation is that such an investment will yield a greater return than other types of investment. Despite the fact that only a relatively small number of start-ups are financed with venture capital, they are often the fastest-growing ventures and most innovative. [7] Integral part after making the investment is the involvement of the venture capitalist in the management of the business, such as becoming members of the board of directors. Their role in the management spreads from the top level of the firm to the lowest levels. That includes: protection of intellectual property, providing guidance to entrepreneurs, monitoring the new company, influencing strategy, help in finding management and shaping boards, creating high-salaried and skilled positions, and creating company checks and balances by sharing investments with other investors. [8] The venture firms are also using the synergies channels between the various companies they have invested in. One possible example of successful integration is when a company that has better distribution technology may help another company or its management in the venture portfolio that has a great pharmaceutics or software product, but does not have adequate distribution technology.

In the formal lifecycle, venture capitalists will help companies grow, but mainly they pursue to exit the investment in three to seven years. Early investments take between seven and ten years to mature, while later stage investments only need a few years, so that the demand for investment life cycle must be congruent with the appetite of the companies’ limited liquidity. The investment risk is neither a short nor a liquid investment, but an investment should be done with great care, constancy and expertise.

Although, high-tech investments are the largest part of the venture firms’ financing policy in U.S and the company receives a lot of attention for its high technology investments, venture capitalists invest in companies such as construction, industrial products, services, etc.Venture firms come in various sizes from small seed specialist firms of only a few million dollars under management to firms with over a billion dollars in invested capital around the world. Likewise a venture capital investor may be a single individual but a great part of the venture capitalists are organized as a limited partnership.

According to Lerner, government efforts can also stimulate growth and bring success but they must proceed with caution. The main aspect the countries with overall performance and using governmental support is to have balanced accountability and independence for the funds in which they invest and have co-invested into funds with private investors. [9

Significant entrepreneurial activity, research universities, secure property rights that can be judicially enforced in a timely manner, an educated workforce and others are examples for key elements. In their presence is considered that venture capital can accelerate innovation and force positive outcomes. The injection of venture capital can be a catalyst that brings these elements together. In the United States, Intel, Microsoft, Apple Computer, Cisco Systems, Compaq, Sun Microsystems and many others distinct companies are instances for well-known and highly successful businesses created with venture financing. [10

3 Venture capital and innovation

3.1 Determinants of innovation

How to measure innovation is a much debated topic in a number of researches and a lot of determinants have been developed in order to solve the problem. I decided to follow a scheme in which I will discuss the first major experimental studies in detail. Then, I will argue and present the results from resent experiments, which use the same or similar analysis.

In thinking about the product market dimension Hellmann and Puri draw an important differentiation among the competitive strategies of new companies. In order to study the effect of VC on innovation they build a distinction between innovator and imitator strategies. As innovators are named those entrepreneurs that introduce new services and products to the market for which no close substitute is yet offered. Imitators are late adopters also engaged in relatively new products and technologies. The main difference is that they are not the first movers in their field of activity and therefore tend to complete other aspects than innovation. [11] With this differentiation between innovator and imitator strategies, a series of observations related to venture capital financing could be made. First, whether the choice of a product market strategy has connection with the type of financing obtained by a start-up company. Second, investigating the relationship between choice of an investor and outcomes in the product market. There might be various interaction effects pointing in different directions and therefore an empirical analysis is debated to submit these questions. [12

Another research conducted from Kortum and Lerner examines the connection between VC and innovation. The relationship is propounded through the effects of Research and Development (R&D) spending and venture capital funding on the number of patented innovations – a stylized model of the relationship between VC, R&D, and innovation. [13

3.2 Empirical Researches

3.2.1 Product market strategy and outcomes

In this chapter the empirical research of Hellmann and Puri for the effect of VC of product market strategy and outcomes is being presented in detail. [14] The research is based on unique collection of dataset of 173 high-technology companies in Silicon Valley, where a high incidence of entrepreneurial activity with rich setting is provided. The sample consists of surveys, interviews, commercial databases and any publicly available information. Its structure also enables to observe a timeline of events for each company. The entrepreneurs are classified into two major groups according to their best described initial strategy as an innovator strategy or an imitator strategy. As innovators are considered the companies that either introduce a radical innovation in an existing market, create a new market or develop a technology that will lead to products and services that satisfy either of the above criteria. Based on that data, the two major aspects – strategy and outcomes – are studied using the method of hypotheses.

While testing for interactions, the timing structure of events is carefully observed. In particular, the model consists of ex ante strategy prior to financing, the financing itself, and the ex post product market outcome. Therefore, examined is the interrelationship of the ex ante strategy (innovator or imitator) and the type of financing (VC or other) on the one hand, and the interrelationship of the type of financing and subsequent product market outcomes (in particular time to market) on the other.

The first part of the analysis examines whether the product market strategy affect the investor type. First null hypothesis (H0) is that there is no connection between the type of financing and product market strategy, meaning, the type of financing is independent from the ex ante strategy of a start-up firm. Two alternative hypotheses (H1) are suggested. The first H1 is that, venture capitalists prefer to finance innovator companies, the second H1 postulates that, venture capitalists prefer to invest in imitator businesses. Innovators are characterized with the advantage in identifying and then assisting innovator companies while imitators’ business concepts are easier to comprehend and communicate.

In a probit model is found that innovators are more likely to be financed by venture capital than are imitators, this result is statistically significant at a 5% level. Results also represent that innovators obtain VC earlier in the life cycle than do imitators and which refuse the criticisms that VC does not support the most innovative start ups, or that venture capitalists invest in innovative companies only when they are already older and less risky. Relative to imitators, innovators are 1.96 times more likely to obtain VC in any given period of time, and the result is statistically significant at 1%.

These results reject the H0 that, there is no connection between and entrepreneurial company’s strategy and its tendency to obtain VC financing. Firms pursuing an innovator strategy are more likely to obtain venture capital and to obtain more quickly. Venture capitalist are not shying away from the uncertainty of innovative business concepts, it doesn’t seem to be true that they only invest at a later stage when much of the uncertainty may already have been resolved.

In the second part of the analysis, the dependence between VC financing and the time it takes a company to bring its product to the market is examined. The second H0 claims that the type of financing is product market neutral, meaning, the product market outcomes of a start-up company is independent form the type of financing . As most important market outcome is distinguished the time it takes to bring a product to market. The first H1 is that, venture capitalists quickly bring a product to market because of they identify promising companies and assist them. Alternatively, venture capitalists as patient investors are giving more time for the start-up through long development cycles with a higher consideration levels.

It is found that the presence of VC is associated with faster time to market. According to the modified Cox proportional hazard model, the likelihood of the first product sale increases by a factor of 1.88 with the advent of a venture capitalist, statistically significant at the 1% level. This effect is particularly strong for innovators with factor of 3.37 and significant at 1%, but statistically insignificant for imitators.

These results reject the second H0 that VC is product market neutral. VC is associated with faster time to market and this association is particularly strong for innovator companies. One interpretation of these results is that venture capitalists guide the companies to bring their product to market faster. Above all, this effect is more pronounced for innovators and explains the first finding that innovators are more likely to obtain VC.

In particular, there are some alternative interpretations and information from the empirical study extracted. Moreover, for the venture capital-backed companies 59% (66% innovators and 50% imitators) list obtaining VC as a milestone, for the other companies (not VC-backed) only 27% list obtaining financing from some other source as a milestone. This difference is significant at the 5% level. The outcome shows that companies are more likely to consider VC as a crucial event than obtaining financing from some other source of finance. As a robustness check whether the finding of a faster time to market could be due to the fact that venture capitalists select companies with faster time to market, could be threw off using the timeline of events. The trivial understanding typically claims that the nature of the venture capital companies is to select good entrepreneurs and to add value to them but the theory and practice suggest that these may well be complementary activities. [15] Briefly, the allegation for picking the right industries at the right time could not be proven and therefore rejected.

In that experiment I find some important advantages: the independence of the form of financing, the availability of the whole timeline of the events, the usage of interviews and surveys. However, there are some problems and limitations of the research which I am taking into consideration. First of all, the research is conducted for the timeline in 1994-1998, the effect of dot-com bubble is not observed, which is followed by the changes in the investment’s strategy of the venture capitalists. Another consideration is that the research is conducted in USA and more specifically in the Silicon Valley, which represent only one third [16] of the invested venture capital in USA. Moreover, according to Mayer, the market in Europe [17] significantly differs from that in USA. Gompers and Lerner point that the possibility remains, more innovative firms select VC for financing, rather than VC causing firms to be more innovative. [18] Unfortunately, the narrow focus of the sample could have only limited applicability for companies under different economic base conditions.

3.2.2 Patented inventions

By way of contrast, Kortum and Lerner, examine patterns that can be discerned on an aggregate industry level, rather than on the firm level. [19] slamka, the empirical research proposed from Kortum and Lerner discuss the relationship between VC, R&D and number of patents as a measure of innovation. [20] The study analyzes annual data for twenty manufacturing industries between 1965 and 1992. The study used as dependent variable the number of patents issued to U.S. investors sorted by industry and date of application, and as explanatory variables are used the money spent for innovative inventions. The data are based on the measures of VC collected by Venture Economics and industrial R&D expenditures collected by the U.S. National Science Foundation (NSF). There are two important problems in the research, which are taken into consideration. First, patenting in each industry can be sometimes only indirectly classified, and second, the data rarely do not allow a clear division between VC and R&D investments. In order to avoid some misleading, the problems are carefully examined and some of the data is not used in the study. That measure is less likely to influence the final conclusion.

This model also suggests that the reduced-form regression may overstate the effect of venture funding. This possibility may occur when venture funding and patenting positively correlate to arrival of technological opportunities as a third unobserved factor. The concerns are addressed in two ways. First, the outbreak of a major event in the VC industry. In 1979, the U.S Department of Labor freed pensions funds to invest in VC. This kind of huge changes is to determine the role of VC as it is unlikely to be associated with the arrival of entrepreneurial opportunities. On the other hand, the R&D expenses are used to identify the starting or already existing technological capabilities, which are expected by economic actors, but unobserved to econometricians. One possible solution to suppress the causality problem is to estimate the impact of VC on the patent-R&D ratio, rather than on patenting itself.

After taking into consideration the causality concerns, the results from the study shows that VC does have a strong positive impact on innovation. The estimates based on the ratio comparison dollar to number of patents suggest that VC appears to be about three-four times more effective in stimulating patenting than a traditional corporate R&D. Although VC was less than 3% of corporate R&D from 1983 to 1992, it is responsible for about 8%, of U.S. industrial innovations in this decade which corresponds to much greater share.

Another problem that is monitored by Kortum and Lerner is that, VC might encourage patenting, but having no impact on innovation, this effect may occur if the VC backed companies simply patent more innovation to impress potential investors or to prevent the expropriation of their ideas by these investors. This possibility is examined by comparing the quality of patents introduced from venture-backed and non-venture-backed firms, the results show that venture backed entrepreneurs does not seem to produce lower quality patents. Furthermore they are more frequent litigators of trade sector, sustaining the goodness of the patents and verifying that VC has positive effect to innovation.

In short, one very important conclusion from that observation is the consistent with the results from the first empirical research, more over the data in the first one is ex ante and in the second one ex post, which make the conclusions significantly strong.

3.3 Estimate the effects of venture capital on innovation

Despite the importance of VC and its ability to support the development of both individual companies and the economy as a whole the relationship between this instrument and the innovative behavior of entrepreneurs are studied only for a short time. Similarly, the causal relationship between VC and innovation is not clear. VC may spur innovation by relaxing the financial limitations that the innovative firms collide, on the contrary, when innovation opportunities arise, innovating firms may demand venture capital investments and, as a consequence, venture capital markets grow.

From the empirical research of Hellmann and Puri follows that there is an interrelationship between the type of investor and product market behavior of start-up firms, it leads that the innovation entrepreneurs are more likely to obtain VC financing. The presence of VC, especially for innovators, is also associated with significant reduction in the time taken to bring a product to market. Thus, the positive effect of VC for innovation could be observed with very high significant level. [21

On the same hand, the study article of Kortum and Lerner about the impact of VC on technological innovation suggests that the effect is positive and significant. VC investment increases number of patents more strongly then industrial R&D. The results are substantial to sub samples of industries and different measures of venture activity, moreover, the representations of the relationship ratio between patenting, R&D, and venture capital is with very high significant level. [22

According to another research conducted from Lerner in 2010, 10 years after the research from above, he confirms that the arrival of VC to Mexico sparks innovation, furthermore, VC is not only catalyst for innovation but also active the job growth in the region. VC speeds company growth and reduces the time for research, acts as a business accelerator, assists market development and a go-to-market strategy and appears as one of the standard maintainers of the market. The Venture-backed firms in Mexico are typically younger when they IPO and produce higher quality patents than businesses financed with other resources. [23

On a research conducted from Mayer, the “bridge” [24] function of VC between idea and innovation is investigated. The study is built on the information from 15 Western European countries and the USA over a period between 1993 and 2006. [25] Unlike the studies of Hellmann/Puri and Kortum/Lerner, the particularly volatile period after 2001 is covered, when the previously steady upward trend in VC investments was broken for the first time. This increases the reliability and explanatory power of the results. For considerably great extent of the analysis, the model is based on: triadic patents – to measure the input of ideas, and growth in total factor productivity – to measure the innovation success. [26] The discovery of positive statistical correlation between VC financing and the translation of ideas into successful innovations confirms the bridging function that VC plays. This correlation is stronger in the earlier stages of financing the company, i.e. investments have a more notable effect in the seed stage than in the expansion one. The relation appears to operate in the direction from VC investment to commercialization. The results showed that the increase in venture capital investments deepens translation of ideas into innovation, in other words, a causal relationship is observed. Another conclusion points that the investment side mainly drives the positive effect of VC rather than the funds being raised. It therefore seems unlikely that VC activity may be increased only by providing the industry with more VC capital. [27

On the other hand, applying the model of Caselli, Gatti and Perrini to the Italian market, reveals some interesting features of VC and its role in financing and developing innovation. Using data from Italian venture backed and non-venture backed companies traded on the Italian Stock Exchange between 1995 and 2004, the research shows that the role of venture capital in Italy does not seem to promote innovation. It appears to be mainly concerned with the growth of sales. In detail, the tendency to innovate is a fundamental requirement to be approved in the screening phase of the VC selection process, but on the other hand, it seems that the entry of venture capital in the company does not encourage continued innovation. [28

Similarly, Engel and Keilbach investigate the connection between venture capital and innovation in Germany. They find weak evidence of relationship between venture capital and innovative behavior, which shows that innovation plays an important role before the venture capital investment and, therefore, it is only to attract sources of venture capital. After investments are made, the innovation process slows down, this suggests that patents stimulate venture capital investment but not the other way around. [29

These results are also consistent with Stuck and Weingarten, who propose an ex post analysis about the real development of already funded companies. The sample consists of more than 800 IPOs of electronic high-tech firms listed world wide after the start-up phase, they show that innovation level drops steadily, and funded companies perform as much as non-funded companies. The research shows that after the IPO, only a small group of firms analyzed were able to increase their market value. [30

In another research, Fulghieri and Sevilir develop a theory of the organization and financing of innovation activities, in which the choice of organization and financial structure of R&D plays a strategic role. In particular, they show that, alone venture capital financing is more likely to occur when R&D projects have high research intensity, when competition in R&D run is less intense or R&D cycle involves early-stage research and when research unit is financially limited. [31

4 Implications of the collapse in venture activity for innovation

In this chapter I seek to understand the implications of the collapse in venture activity for innovation. In the years after the dot-com bubble have seen a dramatic decline in VC activity. Investment activity has fallen by more than da vzema Danni ot nekade [32] and fund-raising by VC organizations has similarly undergone a sharp fall. The same effect of decreasing VC investments is also observed during and after the 2007-2010 financial crisis. [33] When taking into consideration the findings from chapter 3, the implications of this decline could be catastrophic for the technological innovation.

According to Gompers and Lerner the situation may not be as serious and dangerous as it initially appears. [34] While, as I argue in chapter 3, there are many reasons for believing that on average VC has a powerful influence on innovation, that influence could be far from uniform. The overall correlation between VC and innovation is positive, but it may be quite different across the “cycles of venture activity” [35] . Gompers and Lerner examine first the peak periods of VC and then make implications for the collapse ones. [36] To deal with, they illustrate this unevenness with both: case-study and empirical evidence.

Gompers and Lerner support the field-based evidence [37] with two examples in boom periods between the years 1990-2000. The first one presenting the peak period of biotechnology investing in early 90s, and the second, the boom of internet and telecommunication investments between 1998-2000, later become famous with the name “dot-com bubble”. During peak periods the venture capitalists funding firms are too similar to one another, the consequences of these overgrown investments are frequently the same: same targets, intensive negotiation for scientific and technical professionals, highly duplicative researches, costly legal proceedings for intellectual property theft and misappropriation of ideas. Most of the firms yielded very disappointing returns for their venture financiers, in many cases the firms were liquidated after further financing could not be arranged. Funds appear to be extended much less efficiently during the boom period, the reason for this may be found in the presence of misleading public signals or over optimism on the part of venture capitalists. Meanwhile, many obviously promising areas stayed unfunded as venture capitalist rushed to focus on the most visible and popular investment areas. The impact of VC investment was not as powerful in spurring innovation during these periods as in others.

The statistical evidence [38] of Gompers and Lerner shows the same result that the effect of venture capital on innovation is less pronounced during boom periods. This evidence is based on the same framework as the empirical research conducted from Kortum and Lerner [39] , which analyze annual data for twenty manufacturing industries between 1965 and 1992 and use patents issued as a dependent variable. As the model reports, the effect of patenting is some 15% lower during the boom periods, a difference that is strongly statistically significant, the magnitude of the effect of venture capital on innovation subsides, but remains positive and significant.

My observation from those results is that the field study result corroborates the statistical evidence, suggesting that venture capital’s effect on innovation is less pronounced during booms but is positive. According to Gompers and Lerner [40] the patterns from above may lead us to less worry about the short-run instability in venture financing, the expected impact on entrepreneurial activity is likely to be significant but the effects on innovation should be more moderate. VC fundraising and investment has decreased considerably after the internet boom of 2000, but the level of activity is still extremely high in respect to the period before the crisis. From historical perspective, ignoring the dot-com bubble, the VC industry shows robust growth over the past decade. Mayer [41] confirms the observations of Gompers and Lerner with data for 15 European countries and the USA between 1993 and 2006, including the period of peak and weakness of the VC investments not only in the US but also in Europe. The research demonstrates the steady positive effect of VC in the transition of the entrepreneurs’ ideas in successful innovations.

In the following paragraphs I will discuss the implication of the financial crisis on the venture capital backed innovation. So far, there exists only small number and limited studies that have empirically analyzed the impact of a financial crisis on VC activity. In two of the few studies on this issue, Block, Sandner and De Vries analyzed the VC investments in US Internet firms and VC activity across different industries and countries (US vs. non-US). [42

Block, Sandner and De Vries summarized that there is a decrease in VC activity due to the financial crisis, although it is not as large as one might have expected. As a whole, the VC market did not come to an immediate and complete halt. The effect differs with regard to the stage of financing: firms in later financing rounds received less funds than before crisis while for those obtaining initial financing no such result is observed. Also, the slowdown of VC activity is more notable in US than outside US. [43

Due to the external shock caused by the financial crisis, the VC market dries up. The evolution of innovative industries might be long-lasting negatively affected. Innovative entrepreneurs could run into severe liquidity problems, and the commercialization’s speed of technological innovations might slow down. Undoubtedly, the economic growth of the countries would be negatively affected, the exogenous impact on VC activity would lead to a severe funding gap in the financing of technological development and innovation. Unlike the last slowdown of VC activities after the collapse of the dot-com bubble in the year 2000, the current slowdown came more as an exogenous shock. In the 2007-2009 crisis, what initiated the downturn of VC activity were not unrealistic expectations but instead problems in the financial sector and that could differ the impact of VC on innovation in completely other way than the internet crisis. [44

I can conclude that all recent researches only confirm that the VC investments decrease, but the effect on innovation is not clearly reviewed. One possibility is that all investors are more careful and invest only in more stable and clear ideas and in that way the innovation could be slightly lagged. Secondly, the innovation determinants like relationship between innovators-imitators and the number of patents are not deeply investigated. Taken together, the evidence supporting the negative impact of the crisis on innovation is weak. It may take some more time for the commercialization of the new innovations, especially the less profitable, but as a whole the innovation is likely to persist even during and after the crisis’s downtime. Thanks to the scientific curiosity and enthusiasm the innovation process will continue in the short and long-term.

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5 Conclusion

Although, some recent researches show the role of VC to innovation as decreasing, I can say with very high significant level that positive effect is undoubted.

From the all the discussions and researches I am dividing the VC fund-raising and investment in three periods and I conclude for each one. The first period is a cycle of normal distribution of VC, according to all researches, the VC have a positive effect on innovation and spurs it. The second period is a peak one, characterized with less effectiveness of the invested capital but still with positive effect. The last one is a period of collapse, although the VC investments decline, the positive effect on innovation is still there.

Many questions are left unanswered and provide good opportunities for future research. For example some of them could be directed to long-term effect of the recent finance crisis.

Does the impact of financial crises on VC activity differ among industries or regions?

How do the start-ups respond to the challenges posed by the financial crisis and the difficulties encountered in the search for VC funding?

Does a lower success rate of VC-backed companies lead to a decline in the performance of VC funds?

And ultimately, over a long time period, does VC as a financing instrument for innovative start-ups become severely harmed as an effect of the crisis?

What is the effect of the crisis on the performance of VC funds?

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