Impact of venture capital holding on firm life cycle: Evidence from IPO firms

This paper examines the impact of VC ownership beyond the IPO listing on important and consequential corporate decisions in a firm's lifetime. We find that VC funds delay the initiation of dividends by approximately two years, delay the use of external growth strategies, and postpone introduction to the corporate bond market. These results are consistent with the view that VC funds extend the growth phase of the firm. We show that their presence at the time of these decisions leads to positive stock price reactions, suggesting that they provide a certification effect that signals continued growth opportunities, and that VC certification is not limited to the IPO listing.