The VC factor: Data driven insights about VC-backed start-ups in Europe

“The VC Factor” is the first large-scale study of VC-backed start-ups located in the European Union. Thanks to the joint effort of the EIF and Invest Europe, the research looks at about 9,000 firms invested in 2007-15 and analyses their characteristics as well as their post-investment performance.

The study employs cluster analysis to evaluate and group VC-backed firms according to their four-year growth rates across five key metrics – assets, revenue, staff size, intangibles and operating costs. Start-up growth can be sorted in five profiles – laggards, commoners, all-rounders, visionaries and superstars. Laggards dwindle, commoners grow mildly, all-rounders record considerable progress across all indicators, visionaries’ intangibles skyrocket and finally, superstars’ growth is astronomical on all fronts.

“The VC Factor” also examines the role of VC in fostering start-up growth by constructing a group of comparable firms, which could have received financing, but did not. Apart from laggards, VC made every other profile grow considerably more than their non-VC-backed counterparts. Furthermore, almost half of high growth start-ups would have either fallen into a less successful profile or defaulted in the absence of VC. Overall, when an entrepreneurial idea has a high potential for success, the “VC factor” expands their opportunities for growth and enables start-ups to unleash their full potential.

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