Venture capital and industry specialization : an empirical study of venture capital investments in Norwegian portfolio companies
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- Master Thesis 
Applying a carefully constructed data sample of 120 Norwegian portfolio companies being backed by Norwegian Venture Capital firms, this thesis aims at answering how the degree of industry specialization in Venture Capital firms affects the performance of portfolio companies. This thesis applies three different measures of industry specialization, in which two are derived from the literature on corporate diversification. Further, the thesis also explores the effects of specialization at different industry levels. Lastly, having access to detailed accounting information on Norwegian portfolio companies allows us to analyse detailed performance measures in different time windows, by considering A) Increase in profits, B) Increase in revenues, C) Revenue growth, D) Payroll growth and E) Productivity growth. We provide evidence of a positive relationship between the industry specialization of a Venture Capital firm, and performance in portfolio companies. Considering specialization at different industry levels, we find that industry specialization has a positive effect on the performance of portfolio companies when Venture Capital firms specialize at industry section level, and have portfolios with more than 40% of the investments in the same industry section. We find that there is a positive effect from industry specialization if Venture Capital firms invest in their preferred industry section, and a negative effect of industry specialization when Venture Capital firms invest outside their preferred industry section.