The role of venture capital and private equity for innovation and development of SMEs : evidence from Italian puzzle

Numerous studies have discussed that even if fundamental for innovation and economic growth, SMEs are often financially more constrained than large firms. Therefore, venture capitalists are often the only available sources of financing to small and young companies. Through the analysis of a database that includes 160 funding deals signed in Italy, we research for empirical evidence of the determinants and effects of VC and PE investments. We find that VC and PE funds are more likely to finance younger and smaller firms. We confirm the presence of the certification effect under new circumstances applying to SMEs.