High-Status Venture Capital and Foreign Market Entry: Evidence from European New Ventures

The internationalization of new ventures has become a central challenge for entrepreneurial firms seeking to grow and compete globally. Yet, many new ventures face resource constraints and lack legitimacy in foreign markets, often relying on external affiliates to support their international expansion. This study examines the role of Venture Capitalists (VCs) in determining new ventures foreign market entry decisions and long-term performance. We theorize that high-status VCs provide access to more and higher-quality complementary resources, as well as offer certification in foreign markets, enhancing the likelihood that new ventures decide to enter these markets. Using a dataset on 5,471 private European-based new ventures that received VC from 2005 to 2018, we find that high-status VCs significantly increase new ventures foreign market entry decision, and the effect is stronger for new ventures with lower pre-entry technological capabilities. Contrary to expectations, we also find that high-status VCs alone do not improve exit outcomes following new ventures foreign market entry. Our results remain robust across a series of analyses that address endogeneity concerns related to high-status VC selection.