Explaining returns on venture capital backed companies: Evidence from Belgium

Using a unique database of 990 vc-backed belgian firms, we study whether compatibility between corporate and environmental characteristics matters. We address two questions: (i) does the interplay of company, industry, and product factors affect the expected returns of the vc-backed firms? (ii) does the joint compatibility between these factors results in a non-linear increase in performance? panel data analysis shows a significant influence of factor compatibility on returns. Quantile regression analysis indicates a non-linear relationship between the return and its determinants. Conjoint analysis identifies certain combinations of factors, which collapse into classifiable patterns described in the strategic management literature.