One of the basic premises of venture capital is leverage, which often means adding money and other resources to speed up growth. As a result, small-to medium-sized venture funded firms are expected to show significant growth at an early stage. Our research examines how equity based-venture funding methods affect SME performance and internationalization. We divide venture capital financing into several categories: incremental financing where firms receive their venture capital funding in portions, lump-sum funding where firms receive their funding in one lump-sum, syndication where two or more external investors participate in a single financing round and non-syndicated financing where one investor participates in a single financing round. The results show that type of equity-based venture capital financing affect performance and internationalization. Annual sales growth rate and annual turnover are used as proxies for performance. Export ratio is used as a proxy for internationalization. Staged financing and financing through a syndicate has a positive effect on performance and internationalization when used separately. We observe a negative effect when syndication and staged financing are used in combination.

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Venture capitalist and buy-out funds are often considered experts at investing in high-risk projects and companies. To be successful investors, private equity funds must therefore manage the many aspects of risk that are associated with investing in non-public enterprises. This study examines how Indian private equity funds manage several dimensions of risk in comparison to non-Anglo-Saxon funds. We analyze risk management preferences in Indian and Franco-German funds in pre- and post-investment stages. The results, which are discussed in detail, show significant differences between the two groups.

To be successful in the private equity industry, funds must manage the many aspects of risk that are associated with venture capital and buy‐out investing. This study provides survey evidence of a wide range of risk management practices among 142 European funds in the private equity industry. The authors classify funds based on whether they are primarily involved in early‐stage financing (venture capital funds) or primarily later‐stage financing (buy‐out funds), and then analyze the effects of fund type along several dimensions of risk. The results show differences in how venture and buy‐out funds manage risk, which is most developed when evaluating new investments. Post‐investment risk practices are less developed. © 2007 Wiley Periodicals, Inc.

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