The Effect of Venture Capital Involvement on Capital Structure Determinants*

This paper analyzes the change in the capital structure behavior in a sample of Spanish venture capital (VC) backed firms after the first capital infusion. We find that VC investors contribute to unlisted growing firms in the attraction of other long term sources of funds to continue their growth process. Our results show significant changes in determinants such as tangibility, size and profitability. Regarding tangibility and size, the entrance of an external investor seems to have a certification effect that eases the need to have either tangible assets or a large size to obtain additional debt financing. As regards profitability, the investments carried out after the initial VC investment do affect short term profitability (i.e. larger depreciation), but this situation is not linked to a restrained access to external debt. JEL classification: G32, G24.