Venture capital and the financial crisis in Portugal: the VC managers’ viewpoint

Author(s):

Carlos Cabral-Cardoso, (Faculty of Economics, University of Porto, Porto, Portugal)

Maria Céu Cortez, (NIPE – School of Economics and Management, University of Minho, Braga, Portugal)

Luísa Lopes, (Faculty of Economics, University of Porto, Porto, Portugal)

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Abstract:

Purpose

The purpose of this paper is to examine, from the venture capital (VC) managers’ perspective, the impact of the international financial and sovereign debt crises on the VC industry in Portugal, and the changes and adjustments VC managers were forced to adopt to their procedures and current practices to cope with these challenges.

Design/methodology/approach

A two-step research design was adopted to best capture the dynamics of the crisis. Data were collected through in-depth semi-structured interviews and content analysed. The initial set of interviews with ten VC managers was conducted in 2011, immediately before the country bailout; and the second set in 2013, when the full impact of the debt crisis was being felt.

Findings

The study shows that the crises had a significant impact on the VC industry producing a complex and dynamic environment with high levels of uncertainty. The VC managers’ contradictory perceptions reflect their own struggle to figure out the best way to deal with the pressures in such a volatile environment where new opportunities may also arise. In general, VC firms became more selective adopting a more prudential attitude and tighter control mechanisms.

Originality/value

This study contributes to the field by analysing, from the VC managers’ perspective, the cumulative impact of the international financial and sovereign debt crisis on a European VC market with specific features: small dimension of the industry operating in a bank-centred capital market and where family-owned SMEs predominate.

Keywords:

Portugal, SMEs, Financial crisis, Venture capital, Sovereign debt crisis, Perceptions of VC managers

Type:

Research paper

Publisher:

Emerald Group Publishing Limited

Received:

08 January 2016

Revised:

20 May 2016

Accepted:

31 May 2016

Copyright:

© Emerald Group Publishing Limited 2016
Published by Emerald Group Publishing Limited
Licensed re-use rights only

Citation:

Carlos Cabral-Cardoso, Maria Céu Cortez, Luísa Lopes, (2016) "Venture capital and the financial crisis in Portugal: the VC managers’ viewpoint", Journal of Small Business and Enterprise Development, Vol. 23 Issue: 4, pp.1032-1056, https://doi.org/10.1108/JSBED-01-2016-0007

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