Does Venture Capital Foster Growth?

This contribution to the George Washington University's Round Table on Financing Innovation summarises the findings of a recent publication about the impacts of venture capital on firm growth and innovation. Applying a two-stage propensity score matching on Austrian micro-data, the findings assert that the recipients of venture capital lacked access to alternative sources of capital ("specific financing function"), that venture capital is invested in firms with above average performance potential ("selection function"); and finally that venture capital also has a genuine positive impact on firm growth, yet not on innovation output ("value added function").