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