The Venture Capital - SME Relationship: An Innovative Financing Strategy in the Entrepreneurial Ecosystem

Abstract

Venture capital financing plays an essential role in supporting the development of innovative, high-growth companies. This article examines the impact of venture capital on company performance and sustainability, based on an empirical analysis of startups that have benefited from this type of financing. The results show that venture-capital-backed companies show faster sales growth and higher profitability than their non-funded counterparts. What's more, the support provided by venture capitalists is not limited to financial resources; it also includes strategic coaching and access to a valuable network, fostering innovation and adaptability to market challenges. Nevertheless, the article points out that the pressure exerted by investors for rapid returns on investment can also generate risks for the long-term sustainability of these companies. It concludes with recommendations on how to balance short-term performance with long-term sustainability objectives.